Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

PRIVATE BUSINESS

CITY OF NEWCASTLE UPON TYNE BILL [LORDS]

Order for Third Reading read.

To be read the Third time on Tuesday 2 May.

GREENHAM AND CROOKHAM COMMONS BILL

Order for Second Reading read

To be read a Second time on Tuesday 2 May.

Oral Answers to Questions — SCOTLAND

The Secretary of State was asked—

Referendums

Mr. Desmond Swayne: If he will make a statement on his powers in relation to the holding of referendums in Scotland. [118126]

The Secretary of State for Scotland (Dr. John Reid): I have no powers in relation to the holding of referendums in Scotland.

Mr. Swayne: The Scottish Parliament lacks the benefit of a second Chamber to keep it in touch with popular opinion on contentious and difficult matters. Will the Secretary of State take the powers in a short Bill to make greater use of referendums to make good that omission? Will he earn the lasting thanks of parents throughout Scotland, see off his rivals in the dismal Scottish Executive and perhaps bring some relief to nervous colleagues sitting behind him by announcing today that the first such referendum will be on section 28?

Dr. Reid: I know from previous exchanges that the hon. Gentleman does not fully understand the idea of devolution. I remind him that the point is to pass powers to other institutions, and not to decide to run those other institutions by decisions made here. Section 28 is a matter for the Scottish Executive. I am not sure that it is productive or useful for the hon. Gentleman to make his views known. The last time he did so, his views were so

intolerably extreme that they distressed even the Scottish Conservative party, which takes a bit of doing. Having agreed, after several years of debate, to give devolution to the Scottish Parliament and the Executive, we should allow them to get on with it.

Mr. David Stewart: Does the Secretary of State share my view that referendums are useful gauges of political opinion? If he were to hold a referendum among the business community in my constituency, it would be overwhelmingly in favour of the retention of assisted area status. Would the Secretary of State agree to meet me urgently to discuss that issue?

Dr. Reid: I congratulate my hon. Friend on his ingenuity in managing to make a plea for Inverness. I am aware that he is a doughty fighter for the interests of his constituency and its business community. I would be glad to meet him to discuss these matters during the consultation period.

Mr. Eric Forth: Does the Secretary of State agree that one of the great glories of our constitution is that nothing is irreversible? Will he keep an open mind on the possibility of arranging a further referendum in the future to give the people of Scotland the opportunity to say whether or not they regret their decision in the last referendum?

Dr. Reid: Our constitution has a number of great glories, one of which is the right hon. Member, who brings the House long hours and much amusement. Even the worst enemies of devolution would consider it a little premature to reverse in 10 months something it took 100 years to deliver.

Mr. Dominic Grieve: The Secretary of State will recollect that, before the last general election, the then Labour Opposition were keen on local referendums—such as the unofficial Strathclyde water referendum—to influence Government. In terms of the right hon. Gentleman's own reserved matters, does he think that he might have a referendum on whether the contracts for the ships at Govan should be commercial or military? That would allow an opportunity to nail the calumny put out by the Government that the commercial status is due to the last Government, as it is entirely the responsibility of his Government that that has come about.

Dr. Reid: Any opinion poll, representative sample or referendum held by an elected body is up to that elected body. The contracts for the ro-ro ferries were classified as commercial contracts under the advertisements put out in the European Gazette in January 1997, which even those with the urge to have collective amnesia about the last Government can remember was during the period of that Government. Rather than political point-scoring over Govan—particularly when the hon. Gentleman inevitably will score own goals, as he has just done—we would all be better served by concentrating our minds on the real issue, which is how we maintain a competitive and productive shipbuilding industry in this country, including at Govan.

Digital Transmission

Miss Anne Begg: What steps he has taken to ensure that digital transmission is extended to the widest possible audience in Scotland before withdrawal of analogue transmission. [118127]

The Minister of State, Scotland Office (Mr. Brian Wilson): We will ensure that all those who currently receive the main free-to-air channels on analogue television can receive these channels digitally before analogue transmission ceases. The BBC and the Independent Television Commission, which are jointly responsible for the terrestrial television network, are now considering, in consultation with digital broadcasters, Government and others, how to develop the coverage of digital television across the UK.

Miss Begg: My hon. Friend will be well aware that some parts of Scotland at present do not even receive terrestrial analogue television and that reception is very poor in other areas. Will he reassure me and the people who live in those areas that they will not be forgotten again and left out of the digital revolution?

Mr. Wilson: I am very pleased to give my hon. Friend that assurance. The objective must be to do better than is done at present in terms of coverage. The period of transition can be used to develop the technology, for instance using satellites, to take digital reception into the small pockets that do not at present receive terrestrial television. It is also important to make the point that digital is about more than television, because it will also be increasingly important in education and commerce. It would be a real disadvantage to any area if it did not have access to digital television, quite apart from the inability to receive television pictures. We must try very hard and we must not limit our ambitions to replicate what exists at present. We must do better and we must achieve our aims sooner than the planned period of transition.

Mr. Alasdair Morgan: Further to that reply, the Minister may be aware that some of my constituents can receive certain channels only from Northern Irish transmitters or from English transmitters, which may not be a problem during party political broadcasts but which certainly upsets people during football matches. Will he make representations to ensure that digital transmissions in Scotland come from Scottish transmitters?

Mr. Wilson: I remember the days when people travelled to places such as the hon. Gentleman's constituency to see football matches when they were denied to the rest of Scotland. The hon. Gentleman's point will be overtaken by technology, because digital will open up more choice. I hope that people in Scotland, and indeed in every part of the United Kingdom, will be able to see programmes that are generated from within Scotland as well as UK-generated programmes. In fact, that is the answer to dilemmas such as which version of "Newsnight" one wants to see. Perhaps I should get a plug

in, and suggest that with digital it is possible—and some might say desirable—to see the UK version of the programme for all 45 minutes.

Sir Robert Smith: While I welcome some of the reassurances on the technical side, can the Minister assure the House that those who have to access digital transmissions by satellite will not face additional cost barriers? The Minister mentioned the greater diversity of digital television. Will he ensure that in any switch to digital television lessons are learned from the takeover of Grampian Television about the importance of regional diversity in the future of broadcasting and in its regulation?

Mr. Wilson: Like many other people who are familiar with Grampian Television and who remember the great patriotic battle that was fought for the north and north-east of Scotland to keep a separate channel for those areas, I have looked with some cynicism and regret at what has been done since in terms of selling the Grampian franchise to the Scottish Media Group and the disappearance of much of the distinctive identity of Grampian, not to mention many of the jobs associated with Grampian in both English and Gaelic programming.
I certainly hope that the Independent Television Commission will be vigilant on behalf of those concerned in the north and north-east of Scotland. The spread of digital should be about greater choice, more programmes and more channels, and it must protect regional identity. I hope that digital transmission will give rise to a separate Gaelic channel—something that I know the hon. Member for Argyll and Bute (Mrs. Michie) will approve—and that is one way in which digital television will be able to enhance choice.

ONE Pilot

Mr. Douglas Alexander: What assessment he has made of the operation of the ONE pilot project in Paisley; and if he will make a statement.
[118128]

The Secretary of State for Scotland (Dr. John Reid): Early impressions are that the Clyde Coast and Renfrew ONE pilot is an effective way of helping people into work.

Mr. Alexander: Does my right hon. Friend agree that the staff of the Employment Service and the Benefit Agency in Paisley and Johnstone are to be congratulated on that initiative? Would he concur with the view expressed by one of the personal advisers from the ONE initiative in Johnstone who told me last week that the initiative has been especially successful in assisting women returning to work in the area of the Clyde coast?

Dr. Reid: Yes, I am more than prepared to thank the staff my hon. Friend mentioned for the enormous amount of work that they have done. I know that he has given much encouragement to and taken great interest in the initiative.
The ONE scheme provides a one-stop shop for job seekers, providing practical help and advice on benefits, training, work experience, housing and child care. Claimants will have their own personal adviser to help them bring all that together and to assess their job potential. It is part of what we have been doing to assist people to find appropriate work where they want it, and it is one of the reasons why we have been able to create 60,000 new jobs in Scotland, and 800,000 in the United Kingdom as a whole. Employment in Scotland is running at about 2.3 million, the highest for something like 33 years.

Mr. Ian Bruce: I am sure that the Secretary of State will acknowledge that we need this excellent new initiative because new deal has totally failed to help the long-term unemployed. Has the right hon. Gentleman seen the figures that show that the long-term unemployed are going through a revolving door? They are not—

Madam Speaker: Order. Do the figures refer to Paisley, which is the specific subject of the question? If the hon. Gentleman is referring to Paisley, the House would be grateful for the figures.

Mr. Bruce: The figures for Paisley show exactly that there is a very large revolving door in Paisley.

Madam Speaker: Would the Secretary of State like to answer on the Paisley issue, please?

Dr. Reid: Thank you, Madam Speaker, for your helpful ruling. It may help the hon. Gentleman if I explain to him that Paisley is a town quite near to, but distinct from, Glasgow. Such information is usually useful for Conservative Members.
The ONE scheme in Paisley is proving very successful. Youth unemployment and long-term unemployment have fallen there, and that represents what has happened across Scotland, where 77,000 people have gone through the new deal in various capacities. Youth unemployment in Scotland has been cut by up to 69 per cent. since this Government took office. Long-term unemployment has fallen by 20 per cent.

Pensioners

Mr. Tony Worthington: What calculation he has made of the impact of the Budget on pensioners in Scotland. [118129]

The Secretary of State for Scotland (Dr. John Reid): Measures taken so far this Parliament mean that pensioner households will be on average £400 a year better off.

Mr. Worthington: I very much welcome all the measures that have been taken, which include free television licences for the over 75s, and the heating allowance. However, one of the major steps forward attracted the least comment. That was the proposal for a consultation paper on granting tax credits for those pensioners who have been left out so far—the ones who have worked all their lives and have small occupational pensions. Does my right hon. Friend welcome that move

by the Chancellor, which ensures that those people who have served this country well will be taken care of in the future?

Dr. Reid: Yes, I welcome that very much. As my hon. Friend points out, the most recent Budget builds step by step on what we have done for pensioners. We have increased the fuel allowance and extended the capital allowance threshold beyond which pensioners with small savings lose benefit, but we have also pledged to look at the group of pensioners who fall into the category that my hon. Friend described. They are the ones who have a little but lose a lot because they are just above the minimum income threshold for the loss of benefits.
That group of people is very important to the Government. In allocating benefits to pensioners, we have tried to make sure that we have paid adequate attention to all pensioners. The poorest have the guaranteed minimum income, and the oldest have the free television licences, but now we want to help those who have a little but who lose a lot from the benefits system as it is constructed at present.

Mr. Archy Kirkwood: Will the Secretary of State explain how the proposed tax credit for pensioners will work?

Dr. Reid: That is precisely what we are discussing in the consultation process.

Mr. David Marshall: My right hon. Friend will be aware that Glasgow contains many of the poorest constituencies in Scotland, but is he also aware that about 100,000 pensioners in the city will benefit to the tune of around £10 million from winter fuel payments alone? Will he consider that measure—and all the others introduced by this Labour Government to benefit pensioners—and contrast and compare it with all the hardship and misery caused to pensioner by the Tories when they were in power?

Dr. Reid: Yes, indeed. I am sure that I speak for all my colleagues when I say that senior citizens who have contributed so much to creating the wealth of this country should share in a reasonable proportion of that wealth in their old age. That is why the Government restored the free eye tests, which were so disgracefully abolished by the previous Government. It is why we introduced the guaranteed minimum pension for the poorest pensioners, the free television licence for the oldest ones, as well as providing a number of other benefits, including, of course, the £150 fuel allowance for every pensioner household every year. That is particularly beneficial, because giving that benefit in that form means that it is not taxed as it would be if it were paid out weekly. It also means that those in receipt of it are not penalised by losing benefits, as they might be in some cases if it was paid out weekly. That is another step in the Budget towards giving pensioners what they deserve and are due.

Mr. Dominic Grieve: What about the abolition of the age-related married couples allowance, which takes £500 off the income of people coming into pensionable age? How does that square with the Secretary of State's comments? Will he also comment on the fact that £2 billion has been taken from pension funds, thereby


driving a coach and horses through the promises that pensioners would be encouraged to save to supplement their state pension?

Dr. Reid: As I pointed out earlier, we have to consider all the measures that have been passed during this Parliament. I have not mentioned, for instance, the savings that pensioners will make because of the introduction of the new low 10p starting rate of income tax.
A range of other measures have been introduced, one of which the hon. Gentleman has mentioned. However, on balance, as a result of the measures taken in this Parliament pensioners are, per household, an average of £400 better off. I do not claim for a minute that that is enough; I do not claim that we have done everything that we could or would wish to do for pensioners. We have done a lot, but we are well aware that we have a lot more to do.
Step by step, under this Government, pensioners, including the poorest and oldest, will continue to become better off. That is why we are now looking at those just above the income threshold that loses them benefits—those who have a little but lose a lot. We will continue to make sure that pensioners get what they deserve under this Government.

Electronic Communications Bill

Mrs. Rosemary McKenna: What assessment he has made of the impact in Scotland of the Electronic Communications Bill. [118130]

The Minister of State, Scotland Office (Mr. Brian Wilson): The Electronic Communications Bill will further improve opportunities for development of electronic business in Scotland and the rest of the United Kingdom, to which the Government are heavily committed.

Mrs. McKenna: Can the Minister say what benefits are derived by Scotland from the joint ministerial meetings on the knowledge economy? Can he tell us who takes part in those meetings and, more importantly, whether they understand the importance of public access to information technology?

Mr. Wilson: The Government recognise that an enormously important part of the economy, now and in the coming decades, is based on the e-commerce revolution. It is extremely important that there should be no barriers to that; it is important that we should benefit from everything going on throughout the United Kingdom, and it is also important that we should add Scottish dimensions to what we do. The joint group is concerned to ensure that the UK legislation is enhanced and value is added within Scotland.
We are extremely aware of the access issue. In addition to e-commerce, the university for industry will be based on the use of such technology. So everything that we can do to remove obstacles, open up opportunities and make this a real business and career option for as many people as possible will create jobs in Scotland and the rest of the UK.

Mr. John Bercow: If the Bill is as good as it is cracked up to be, how does the hon. Gentleman

explain that—as in England and Wales, so in Scotland—the Federation of Small Businesses has been deeply critical of the enormous regulatory burden that will be imposed by that legislation?

Mr. Wilson: When I see the hon. Gentleman, I think of the phrase "dot.com".

Mr. Bercow: Was that a joke?

Mr. Wilson: It was not a joke; it was to say simply that it is not unknown for the Federation of Small Businesses to be critical of legislation, whether Tory or Labour legislation. That is its job as a pressure group. Anything that allows electronic signatures to be admissible in court as evidence to prove authenticity of documents, smooths the way of e-commerce and adapts to current circumstances is good stuff when it comes to enhancing the technological revolution. Some small businesses will be in favour and others will have doubts. That has always been the way. We must communicate with them to persuade them why they should be in favour.

Oral Answers to Questions — ADVOCATE-GENERAL FOR SCOTLAND

The Advocate-General was asked—

EU Directives

Dr. Norman A. Godman: What recent requests she has received for her advice on devolved and reserved matters in relation to the European convention on human rights and European Union directives and regulations. [118151]

The Advocate-General for Scotland (Dr. Lynda Clark): Both these issues raise a number of interesting and difficult problems that have been brought to my attention and about which I have given advice.

Dr. Godman: There is a great deal of confusion about convention obligations and European Union law. Has my hon. and learned Friend any plans to provide guidance to Members, Members of the Scottish Parliament, peers and journalists on the extension of the convention, its application to Scots law and the differences between convention obligations and obligations under EU law?

The Advocate-General: I am always delighted to assist any Member from any party who wishes to discuss such matters with me. It is my job to advise the Government, and it would not really be appropriate for me to send out advise to other parties.

Sir Patrick Cormack: The hon. and learned Lady seems to operate in an extremely mysterious way. It is the one characteristic that she shares with the Almighty. She has been especially coy with the


House this afternoon, but as she has extended an invitation and as I am not a lawyer, may I see her and will she tell me what she really does do?

The Advocate-General: I would be delighted to give the hon. Gentleman a private appointment at any time to discuss these matters.

Mr. Menzies Campbell: Will the hon. and learned Lady tell the House whether she has considered the provisions of European Union law in regard to its effect on contract for roll on/roll off ferries on the Clyde? In particular, does she understand the distinction between the terms of an advertisement and the terms of a contract when it is ultimately placed? Has she considered whether it is possible to create a contract that will allow the ferries to be built in the United Kingdom, that will meet the UK's military aspirations and at the same time will not be contradictory of our commitments under EU law?

The Advocate-General: The right hon. and learned Gentleman is well aware that as a Law Officer I would not normally, and certainly not in this case, advise him of what advice I have given. I can say that I am aware in general terms of the types of distinction to which he refers.

Civil Service Pension Rights

Mr. Desmond Browne: What role she plays in relation to the proof of irregular marriages in the context of inherited civil service pension rights. [118152]

The Advocate-General for Scotland (Dr. Lynda Clark): The responsible Minister for civil service pensions is my right hon. Friend the Minister for the Cabinet Office. However, I am able to advise that in general terms the solicitor to the Advocate-General for Scotland's office advises all the United Kingdom Departments, and that would include that Department.

Mr. Browne: I thank my hon. and learned Friend for that reply. I have provided notice of the Question as it relates to a constituent's case. Will she tell the House when my constituent, Mrs. Mavis MacDonald, can expect a reply to her request to inherit the pension rights of her deceased partner? Will it be before my correspondence file celebrates its second birthday?

The Advocate-General: I am well aware of the effort that my hon. Friend puts into constituency matters. I am much obliged to him for providing me with specific notice of the case to which he has referred. He will not wish me to discuss in public the details of the case, but I am more than happy to advise that documents are being considered and that the solicitors of my hon. Friend's constituent are being advised about the matter. If my hon. Friend wishes chapter and verse, I am more than happy to provide that to him in private.

Miss Anne McIntosh: Would the Advocate-General advise me whether the normal rules of

common law marriages would apply in a case such as that raised by the hon. Member for Kilmarnock and Loudoun (Mr. Browne)? Would same-sex marriages be recognised for the purposes of inherited civil service pension rights?

The Advocate-General: The case referred to by my hon. Friend the Member for Kilmarnock and Loudoun (Mr. Browne) does not, so far as I am aware, raise any same-sex issues. The normal rules on cohabitation and repute are under consideration, which is part of the background to the difficulties experienced in my hon. Friend's case. The hon. Lady will know that the law in Scotland on marriage by cohabitation and repute is not always easy to interpret, and it may take some time before the proper documents are sorted out.

Oral Answers to Questions — LORD CHANCELLOR'S DEPARTMENT

The Parliamentary Secretary was asked—

Gravesend Magistrates Court

Mr. Chris Pond: What representations he has received concerning the proposed closure of Gravesend magistrates court. [118157]

The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): I have received 23 representations from Members, justices of the peace and other local interested parties, following Kent magistrates courts committee's determination to close Gravesend magistrates court.

Mr. Pond: I thank my hon. Friend for that reply. Virtually all the responses to consultation opposed closure of Gravesend magistrates court. Among those who responded, Kent police has estimated that it will face additional costs of around £30,000 a year, not including prisoner conveyance. Will my hon. Friend join me in thanking Elizabeth Brice, the former chairwoman of Gravesham's magistrates bench, for her 32 years of service, following her decision to stand down as a result of the decision to close? Can my hon. Friend assure my constituents that she, unlike Kent magistrates courts committee, will give careful consideration to the views expressed by the local community?

Jane Kennedy: I am more than happy to associate myself with my hon. Friend's comments on the retirement of the former chairwoman of the Gravesham bench. Kent magistrates courts committee is responsible under statute for the efficient and effective running of the courts in its area. The Lord Chancellor's responsibility is limited to that of an appellate court in any dispute between the MCC and its paying authority over a proposed court closure. I shall pay careful attention to all the representations made during the appeal, and I pay tribute to my hon. Friend for his vigorous representations, although it is too early to say how successful he has been.

Rural Magistrates Courts

32. Mr. Owen Paterson: If he will make a statement on the future of rural magistrates courts. [118158]

The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): I refer the hon. Gentleman to the answer that I gave him on 25 January 2000 at column 180W.

Mr. Paterson: Shropshire's courts have been placed in an area coterminous with West Mercia police authority's area leading to real fears that the six petty session divisions in Shropshire may go the way of those in Hereford, where there is now only one. Going to court is traumatic enough, especially for elderly witnesses, without having to face extra costs and the difficulties of travelling long distances. Will the Minister guarantee that the Government have no covert policy to close magistrates courts in rural areas?

Jane Kennedy: I can give the hon. Gentleman that assurance. The Shropshire magistrates courts committee has no proposals for courthouse closures or for any internal reorganisation.

Mr. Dale Campbell-Savours: To what extent have the changes been driven by public expenditure?

Jane Kennedy: Changes to the boundaries of MCCs are not cost driven, but are designed to meet the improved efficiencies that will arise from the coterminous nature of the new committees in relation to police authorities and the probation services.

Mr. John Burnett: Last week it was announced that nine magistrates courts would close in Devon and Cornwall, which will deny many people justice. Does the Minister agree that possible small savings in her Department, which are far outweighed by additional costs for other departments including the police, social services and the probation service, will not lead to efficiency and will not save public money? Does she agree that she should produce guidance for MCCs on these matters, and that that guidance should be made available to the public?

Jane Kennedy: The hon. Gentleman should draw breath for a moment and bear it in mind that any decisions on magistrates courts, their location and the services they provide are taken by local magistrates on magistrates courts committees, not by central Government. Such decisions are for local determination; any savings that might occur are for the local magistrates court committee to decide—as are the courts and their location. The central council of magistrates courts committees has produced a good practice guide for magistrates courts committees that are considering their accommodation. Both the Lord Chancellor's Department and Her Majesty's magistrates courts inspectorate endorse that guidance. There is no statutory duty to consult the public on, for example,

proposed courthouse closures, but magistrates courts committees are encouraged to consult more widely than required by statute; in fact, they all do.

Mr. Barry Jones: Is my hon. Friend absolutely sure that magistrates courts committees listen to the views of the grass roots? There is some doubt about that in north Wales. Is it right that the chairman of the magistrates courts committee in north Wales should also be the chairman of the North Wales police authority?

Jane Kennedy: Again, those issues are for local determination. It is important that the House bear in mind the fact that proposals by magistrates courts committees generally reflect the aim and expectation that services and facilities offered to all court users are brought up to the standard that we expect and require in the 21st century. Often, older courthouses lack facilities that are in keeping with modern standards.

Mr. Nick Hawkins: Does the Minister not recognise that, however disingenuously she reads out her ministerial brief, saying "It's nothing to do with us or the Government that courthouses are closing", local people in our constituencies want to keep their courts open? It would be far better and far closer to the interests of the people served by those courts for rural courts to stay open, even though their facilities might not be of the highest standard. Undoubtedly, all those closures are happening under her Government's guidelines, which, as we are all aware, are Treasury driven. Whatever she says, there is no way of hiding the real truth from those who are suffering from such court closures.

Jane Kennedy: Whether or not I was disingenuous is for the House to decide—the hon. Gentleman is as gracious as ever. However, most of the magistrates courts that have closed so far have been courts that magistrates courts committees no longer felt able to justify—either because the replacement of substandard facilities was needed or because they might have been satellite courts. For example, they might have been sited in local council chambers that severely lacked the necessary facilities.
I repeat that I shall always support changes that lead to the provision of a better and more efficient service for court users.

Family Mediation

Mr. Gareth R. Thomas (Harrow, West): What steps have been taken to increase funding for mediation in family-related matters. [118159]

The Parliamentary Secretary, Lord Chancellor's Department (Jane Kennedy): The Government are committed to encouraging the greater use of family mediation. The provision of public funding for family mediation will be fully implemented throughout England and Wales by the latter part of this year. That will provide a significant source of income for many mediation services. In 1999–2000, approximately £5 million was spent by the Legal Services Commission on publicly funded mediation.

Mr. Thomas: Is my hon. Friend aware that magistrates courts in Middlesex—my area—have just withdrawn from


a scheme providing mediation in disputes with children? I understand that that is not an isolated example. Will my hon. Friend assure the House that she and her Department have a strategy to tackle that problem?

Jane Kennedy: I certainly hope to reassure the House on that point. Mediation services receive funding under the partnership arrangements that allow probation services to spend a proportion of their budgets in conjunction with voluntary organisations that are working to achieve similar objectives. The Middlesex probation service has reviewed its partnership funding arrangements to ensure that such funding is directed to those projects that contribute most to the service's objectives. Obviously, when those reviews take place, there are occasionally changes in the funding.

Miss Anne McIntosh: When the law is clear that it is for the parties to a marriage to bear the responsibility for saving that marriage, and when no children are involved in a divorce, why should public money be used for a mediation service to retrieve what is, in essence, a private relationship between two individuals?

Jane Kennedy: The Government support the institution of marriage and believe that it is the best way for children to be raised. However, on the specifics of the question that the hon. Lady asks, very often mediation is funded through charities and we fund a national family mediation service through public funds. Local mediation services are not funded by central Government funding, but the fact that we fund the national service relieves the local services of some of those central costs.

Judges (Complaints)

Dr. Vincent Cable (Twickenham): What criteria the Lord Chancellor adopts in choosing to investigate complaints from members of the public against judges. [118160]

The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The Lord Chancellor can investigate complaints about the personal conduct of judges. He cannot consider complaints about judicial decisions. As a general rule he will investigate any complaint that a member of the judiciary has behaved in a way that falls short of the standards that both he and the public expect. This can include allegations of inappropriate behaviour, conflict of interest or rudeness.

Dr. Cable: Is there not scope for a fully independent and transparent system of complaints to deal with cases such as that of my constituent Mr. Darbar, who spent several years in jail for a crime that he did not commit because of a mistake made by a judge—subsequently picked up in the Court of Appeal but for which no redress was possible. Another constituent, a Mrs. Hood, lost her pension because of a confusion over dates on the part of a judge in an industrial tribunal—again, with no redress forthcoming. If doctors can be struck off following complaints, why cannot judges be subject to the same discipline?

Mr. Lock: I hear what the hon. Member says. The Lord Chancellor does consider complaints against judges

extremely seriously, but it is important to keep this matter in perspective. Last year, there were about 412 complaints relating to the personal conduct of judges, arising from approximately 250,000 sitting days, so the allegation that judges routinely make mistakes must be seen in the context that most of our judges are extremely hard-working, dedicated and professional servants of the public.

Angela Smith: Although I accept the Minister's comments, does he not accept that if there were truly independent evaluation and monitoring of judges, it would lead to greater transparency and far greater public confidence? When I raised the subject with my hon. Friend previously and suggested that he introduce Ofjudge, he said that was a novel idea. May I suggest to him that all good ideas start off by being novel? Will he reconsider?

Mr. Lock: I am always willing to listen to my hon. Friend's interesting, and perhaps novel, suggestions, but the independence of the judiciary from the Executive is a fundamental principle of our constitution and should be upheld, and any suggestion that the Executive should have a role in monitoring what judges do and the way that they do it would have to be very carefully considered to ensure that it did not infringe that very important principle of judicial independence.

Mr. Geoffrey Clifton-Brown: There is a suspicion among my constituents that the inflexibility of judges' working hours leads to the postponement of an unnecessary number of cases to another day, involving increased numbers of witnesses having to travel extra days to attend court. Has the spokesman of the Lord Chancellor had any complaints in that respect? If not, will he examine that problem?

Mr. Lock: I am always willing to accept complaints concerning specific instances where such a postponement has happened. The Lord Chancellor has made it entirely clear that the courts, like other public bodies, are there to serve the interests of the consumer, not to support the institution or to work in a way that is convenient for the professionals working in the system. It is essential that the consumers—the parties to the dispute and, very importantly, the witnesses—have the services that they are entitled to expect.
I invite the hon. Gentleman to write to me or my right hon. and learned Friend the Lord Chancellor if he knows of any specific instances concerning unnecessary adjournments. I will ensure that they are properly investigated.

Community Legal Service

Mr. Eric Martlew (Carlisle): What steps have been taken at a local level to distribute information on the community legal service in England and Wales. [118161]

The Parliamentary Secretary, Lord Chancellor's Department (Mr. David Lock): The Lord Chancellor, my hon. Friend the Member for Liverpool, Wavertree (Jane Kennedy) and I have attended local launches and seminars across the country to promote the community legal service and we have issued two CLS newsletters.


After the local elections in May, cards giving information about the CLS will be delivered to every household in a partnership area in England and Wales. That will be supported by advertising campaigns in the local media.

Mr. Martlew: I thank my hon. Friend for that reply, and I also thank him for recently visiting my constituency to talk and to see the actions of Cumbria county council. I understand that it was a very worthwhile visit, especially the video conference with the rural areas. Is my hon. Friend sure that his Department is making the best use of information technology to get the message of this new service across to the public?

Mr. Lock: I am very pleased that my hon. Friend asked that question. Since I went to Cumbria and saw the impressive work undertaken by the community legal service partnership there, including the innovative use of information technology, my right hon. and learned Friend the Lord Chancellor has also launched a community legal service, including the legal information advice website known as "Just Ask". This will provide valuable legal information and advice online to millions of people. I am pleased to be able to tell my hon. Friend that over 70,000 people have visited the website so far.

Oral Answers to Questions — HOUSE OF COMMONS

The President of the Council was asked—

Westminster Hall

Mr. Owen Paterson: If she will make a statement on the cost to date of the Westminster Hall experiment. [118171]

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): It is not possible to give a precise estimate of the cost of Westminster Hall itself, because it is housed in a refurbished Grand Committee Room, and that refurbishment would have been done in any event. Similarly, some £71,000 was spent on professional fees, and that would have been incurred in any refurbishment. But my understanding is that expenditure of some £30,000 was incurred in furnishing the Grand Committee Room additionally for the experiment, and that the running costs are some £13,000 a month.

Mr. Paterson: I think that that is a waste of money. I have attended debates in Westminster Hall which have been so poorly attended that there has been no atmosphere whatever, mainly because of the format. My main memories are of tourists in buses passing behind the Minister's head and bemused schoolchildren going out of the squeaky door. Could we not return to the familiar, traditional format of Committee Room 14, which would house all the Members who wished to attend the debates, a format that works and encourages rigorous debate?

Mrs. Beckett: The "traditional format" of Committee Room 14 has been used for a great many Committees. This is a separate feature. I remind the hon. Gentleman that we have found the opportunity for some 200 extra debates over a year as a result of the Westminster Hall

operations. If the hon. Gentleman wants to say that value for money should be judged in terms of using time in debate, or indeed the number of hon. Members who attend, he is setting rather a dangerous precedent.

Mr. Peter L. Pike: Is it not very unfortunate that Conservative Members seem very widely to feel that the Westminster Hall experiment is a waste of time? Surely, as my right hon. Friend said, it cannot be judged by the money costs? Surely the important thing to judge it by is the way it gives many hon. Members on both sides of the House the opportunity to take part in debates on a far better basis than if we were simply to restrict debates to this Chamber.

Mrs. Beckett: I have noticed that since the Westminster Hall experiment commenced we now have the opportunity to debate about four times as many Select Committee reports as in the past, which in theory is supposed to be to the advantage of the Opposition. Moreover, because our capacity to hold Adjournment debates has increased, the demand for such debates has doubled. Indeed, many Opposition Members, including some who did not vote for the Westminster Hall experiment, make use of it in that way.

Mr. Paul Tyler: May I endorse the last comment of the President of the Council? I have attended a number of debates in Westminster Hall—including debates initiated by Conservative Members—which have been excellent. May I draw the right hon. Lady's attention to the original recommendations of the Modernisation Committee in relation particularly to value for money in what we are doing in Westminster Hall, and remind her that the Law Commission said that it was desperate to have more opportunities for non-controversial legislation, tidying-up legislation, to be taken in a forum that would allow debate where a Division was not required? Has the right hon. Lady had any discussion with colleagues or with the other parties to see whether we could use this badly needed improvement to take some of our legislation in Westminster Hall?

Mrs. Beckett: I have not done so since the experiment began, although I am willing to do it as we review its working. One reason for not having done so is that, as the hon. Gentleman may recall, anxiety was expressed in some parts of the House—perfectly reasonably, I thought—that the Westminster Hall experiment would simply be another way for the Government to get through more legislation. So I gave an absolute assurance that the Government would not seek to use Westminster Hall as such a forum, certainly not during the experimental period. Obviously, we would look at that again only if the House so desired.
I accept, however, that the experiment drew on experience in Australia that provides for some uncontroversial legislation to be discussed in such a forum. Perhaps, over time, the House may want that to happen here, because we are talking not about legislation for which the Government might in some other way find time, but about legislation for which the Government—to put it frankly—never find time. I add a caveat, however. Sadly, what the Law Commission thinks is uncontroversial is not always uncontroversial to everyone else.

Draft Bills

Mr. John Healey: If she will make a statement on the number of bills produced in draft in (a) the 1997–98 session and (b) each subsequent session to date. [118172]

The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): Three draft Bills or parts of Bills were produced in Session 1997–98, six in Session 1998–99, but none so far this Session. Some Departments have, however, consulted informally on Bills in preparation and some draft Bills are expected shortly.

Mr. Healey: I welcome my hon. Friend's declaration that more draft Bills are on the way. Does he recognise that the modernisation of our procedure is strongly backed by many inside and outside the House? Does he also agree that greater use of pre-legislative scrutiny gives greater scope for further modernisation of House procedures, including, perhaps, carrying over legislation, timetabling Bills and even introducing the concept of a voting hour?

Mr. Tipping: My hon. Friend makes several important points. First, draft Bills have been welcomed widely across a number of communities. Secondly, Bills have been improved substantially by pre-legislative scrutiny. Finally, he is right that pre-legislative scrutiny is part of a wider package of measures on which we need to make more progress.

Sir George Young: The Opposition very much welcome the publication of Bills in draft. However, is it not unwise to assume that, just because a Bill has been first published in draft, it will then take less time to pass through the House of Commons and the upper House; and does not the fate of the Financial Services and Markets Bill and the Freedom of Information Bill disprove that assumption? To avoid over-programming the House's time with Government Bills, will the Government be more realistic about the time required by Bills that were first considered in draft when they come before the House?

Mr. Tipping: Clearly, Bills can be improved by pre-legislative scrutiny. The right hon. Gentleman mentioned the Freedom of Information Bill. Again, that was improved in draft, but there were major policy differences that could not be resolved. He also mentioned the Financial Services and Markets Bill. Of course, during its long preparation, the market itself changed; the stock market was demutualised and that had implications for the Bill. However, he is right to say that it would not be wise to assume that, just because a Bill is published in draft, it will have an easier passage. The converse may be true, because people have more time to think about it. Whatever body is asked to scrutinise a draft Bill must have time to do that. It involves a difficult balancing act, because programmed Bills will always need to take priority.

Oral Answers to Questions — PRESIDENT OF THE COUNCIL

Appointments Commission

Mr. Gordon Prentice: What progress she has made in identifying candidates suitable for appointment as chairman of the Appointments Commission. [118173]

The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): Although my right hon. Friend is not responsible for appointing the Appointments Commission, I understand that the appointments process is making good progress. My right hon. Friend the Prime Minister hopes to be in a position to make an announcement shortly.

Mr. Prentice: So am I right in thinking that the Prime Minister appoints the chair of the Appointments Commission which, in turn, appoints Members to the upper Chamber? Is that not a bizarre state of affairs, and is not appointment very much second best to election? As we move towards the next general election, we need the Labour party and the Labour Government to nail their colours to the mast and to argue vigorously for a small, directly elected second Chamber rather than the ridiculous melange that we have been invited to accept at the moment.

Mr. Tipping: I do not think that my hon. Friend is right. He will have an opportunity to discuss those matters when we debate the Wakeham commission on, I believe, 4 May. The Appointments Commission will have seven members, three of whom will be appointed by the main political parties. The present Prime Minister is the first Prime Minister to lose—or reduce—his powers of patronage as a result of a decision by the Appointments Commission. [HON. MEMBERS: "Ah!"] Opposition Members may scoff, but the Conservative party remains the major, dominant party in the House of Lords.

Sir Sydney Chapman: I associate myself entirely with the remarks of the hon. Member for Pendle (Mr. Prentice), and draw the Parliamentary Secretary's attention to more modest appointments. When the commission or the Privy Council makes an appointment, will the person responsible for doing that be entirely dependent on the clerk of the Privy Council trawling the relevant Departments, or will he put in a mechanism encouraging other institutions and voluntary bodies to submit the names of those whom they believe suitable for appointment?

Mr. Tipping: The hon. Gentleman makes important points and I look forward to his contribution in the debate on the Wakeham report on 4 May. The Government intend that appointments should be made from a wider range and different groups of people. One of the Appointments Commission's tasks will be to ensure that a wider choice of names is available. The Government have made substantial progress on the number of people from the black and ethnic communities, as well as the number of women, who have been appointed.

Sir Patrick Cormack: How on earth can the Parliamentary Secretary say that the Prime Minister is self-effacing and abdicating when the right hon. Gentleman is the very fount and geyser of honours? When will the chairman of the Appointments Commission be appointed? The Prime Minister promised that the appointment would be made before Easter. Are we to take that to mean this week, before Orthodox Easter or next Easter? When will it happen?

Mr. Tipping: The hon. Gentleman should not bluster so much. I accept that he is recovering from ill health, but he should listen to my answer, which is that the appointment will be made very soon.

Mr. Robert Maclennan: There is a difference between a commission that appoints cross-party or independent peers, and the new development that the Parliamentary Secretary appears to be introducing by saying that the commission should make political appointments. Does he intend that the Prime Minister should give the commission that power?

Mr. Tipping: I am sorry about that confusion. The Appointments Commission will look for, trawl and appoint Cross-Bench peers from many different groups. Party leaders will still submit their chosen names to the Appointments Commission, which will then make decisions about them.

Oral Answers to Questions — HOUSE OF COMMONS

The President of the Council was asked—

Modernisation

Mrs. Anne Campbell: If she will propose that the Select Committee on Modernisation of the House of Commons review the recommendations in its sixth report (1997–98, HC 779) on current voting methods.
[118174]

The President of the Council and Leader of the House of Commons (Mrs. Margaret Beckett): The Modernisation Committee is currently reviewing that matter.

Mrs. Campbell: I thank my right hon. Friend for her reply. Does she agree that it would be helpful if the Modernisation Committee came up with a single recommendation for electronic voting that would allow right hon. and hon. Members to mingle in the voting Lobby and reduce the time spent on multiple votes?

Mrs. Beckett: My hon. Friend makes an interesting point. However, I am not in a position to respond because the Committee has not yet reconsidered whether there is any possibility of a single recommendation emerging. I certainly share my hon. Friend's view that a multiplicity of recommendations is less likely to lead to a clear decision.

Mr. Ian Bruce: When looking at new forms of voting, will the Leader of the House make

absolutely certain that, whatever system is recommended, it ensures that Ministers come to vote regularly? From the voting lists, it appears that people such as the Prime Minister hardly ever come to the Chamber and cannot be lobbied by their own Members, let alone those belonging to other parties.

Mrs. Beckett: Of course, I cannot prejudge the Committee's views. However, I certainly believe it important to have a focus in the parliamentary day, during a vote, so that Ministers can attend and Members can mingle. I am sure that Members on both sides of the House recognise the value of that.
I have lost count of the times when I have reminded Opposition Members that, contrary to what they say, the Prime Minister attends more Prime Minister's questions, takes more questions, and is in this House more often than any of his predecessors. It is a pity that it is so hard to get the facts into their heads.

Oral Answers to Questions — PRESIDENT OF THE COUNCIL

The President of the Council was asked—

Privy Council Judicial Committee

Mr. Andrew Mackinlay: What recent representations she has received calling for reform of the judicial function of the Privy Council; and if she will make a statement. [118175]

The Parliamentary Secretary, Privy Council Office (Mr. Paddy Tipping): Apart from questions from the hon. Gentleman, no representations about the Judicial Committee have been received.

Mr. Mackinlay: I am pleased to be the first. Will the Minister reflect on the fact that we host, largely fund and appoint members of the Judicial Committee of the Privy Council, who can and still do preside over matters of life and death, and who have given the green light to executions in other jurisdictions around the world? That contravenes our obligations under the European convention on human rights. If the Minister says, "Ah, but they are dealing only with matters of law", I remind him that the House has decided that capital punishment is both unlawful and repugnant. It cannot therefore be right that we continue to host, appoint and fund the Judicial Committee under the present arrangements. Will the Minister reconsider the matter?

Mr. Tipping: The hon. Gentleman described himself as first—for a moment, I thought that he would say "unique". He has his own style. He has asked questions about the matter, and he well knows the answer. The Judicial Committee acts on behalf of other states. It is up to the other states to decide whether they want to change the way in which they deal with these matters.

Points of Order

Mr. Tim Yeo: On a point of order, Madam Speaker. Last Thursday, the Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food, in answer to my oral question about the Government's recent package of help for pig farmers, told the House:
The package has three elements. They have been published, and I understand, too, that the hon. Gentleman's written questions have been answered.—[Official Report,13 April 2000; Vol. 348, C. 495]
My written question, which was tabled 10 days before the Minister's claim, had not, at that time, been answered. It was finally answered yesterday, at column 332W. The answer stated that information about three elements of the Government's package for pig farmers—eligible recipients, conditions of eligibility and time of availability—remains to be announced at an unspecified future date.
The only way to describe accurately the Minister's answer on the Floor last Thursday would involve using an unparliamentary term. Do you share my concern, Madam Speaker, that Ministers tell the House that parliamentary questions have been answered when they have not been answered and that information about Government policy, on which the survival of thousands of small businesses depends, has been published when it has not been published?

Madam Speaker: Some of the points raised by the hon. Gentleman are not points of order; they are a matter for argument. He has put his thoughts on the official record.
May I say in general reply to the hon. Gentleman that some weeks ago, hon. Members asked me to look into the fact that questions were not answered on a named day,

and that there was a great deal of slippage there? Hon. Members also asked me to look into the long delays in correspondence from ministers.
I can tell the House that I have done precisely that. In recent times, I have had a long discussion with the head of the civil service, the Cabinet Secretary, on those issues, and only recently, I had a meeting with the Minister for the Cabinet Office, along with her staff. Both those people are extremely sensitive to the needs of the House. I am totally convinced that they are doing everything possible to try and bring about improvements. The House can be certain that I shall continue to use my best endeavours and to monitor the situation.
I ask hon. Members to be a little tolerant on the issue, as I hope that the improved procedures that have been proposed to me will be allowed to work through, and that we shall see a better service, which the House certainly has a right to expect.

Mr. Paul Tyler: Further to that point of order, Madam Speaker. I am sure that hon. Members in all parts of the House will welcome your statement and the initiative that you have taken. In your discussions, was any reference made to a habit that seems also to be growing: the tendency to delay a reply from a ministerial source until some executive agency can be found to pass the buck to? As a result, hon. Members do not get a direct answer on the Floor of the House at all.

Madam Speaker: I had very long meetings—more than two hours—with the head of the civil service. I hope that all these matters will be looked into. I cannot go into details at this stage, but I want the House to be serviced properly by Whitehall, and that is what I am seeking to achieve.

Corporate Homicide

Mr. Andrew Dismore: I beg to move,
That leave be given to bring in a Bill to create a new offence of corporate killing to replace the offence of manslaughter in certain cases where death is caused without the intention of causing death or serious injury.
My Bill has three purposes. The first is to create a new criminal offence of corporate killing. When the conduct of a company's management falls far below what can reasonably be expected, and is the cause or one of the causes of a person's death, that company must answer to the criminal courts. Secondly, if a company is convicted of corporate killing, the court should not only be able to punish the company severely, but have the power to order the company to put right the failings that were the cause of the death. Thirdly, the Bill would impose on the senior management of a company—its chairman and managing director—an overarching responsibility for the health and safety of its work force, and, equally important, for the health and safety of the general public.
Before becoming a Member of Parliament I practised as a personal injury lawyer, representing many families who had been bereaved by avoidable accidents. Most of those fatalities involved individuals—employees, motorists, pedestrians—and went unremarked in the press; but the feelings of loss and the sense of injustice suffered by the victims' families were just the same as those whom I helped who had lost loved ones in major incidents such as the Zeebrugge ferry disaster and the King's Cross fire.
Three days after that terrible tragedy at King's Cross, during my investigations on behalf of the bereaved and injured, I inspected what was left of the tube station. Nothing that I had previously experienced could have prepared me for the sights and smells of the fire's devastation. As I took statements from victims, distraught relatives, firefighters and tube staff, and as I sat through the public inquiry day after day hearing over and over again about the failures of the senior management of London Underground Ltd., it struck me as outrageous that neither the company nor any of its managers would face criminal proceedings over those 31 deaths. That was because of the inadequacies of the criminal law.
During his inquiry into the 192 deaths on the Herald of Free Enterprise, Mr. Justice Sheen said:
All concerned in management, from the members of the board of directors down … are guilty of fault. From top to bottom the body corporate was infected with the disease of sloppiness … The failure on the part of … management to give proper and clear directions was a contributory cause of the disaster.
However, the prosecution in the Zeebrugge case also collapsed owing to those same inadequacies of the criminal law—inadequacies highlighted by the more recent railway disasters: inadequacies that the Bill would rectify.
It is not just the headline-grabbing fires and rail crashes that concern me. In the last 10 years, more than 3,000 people have been killed at work, and hundreds of members of the public have met their deaths owing to corporate neglect. Only two companies have ever been successfully prosecuted for manslaughter. OLL Ltd. was convicted over the canoeing accident that killed four teenagers in Lyme Regis bay when they were swept out

to sea with inadequate clothing and equipment. The second case involved Jackson Transport, whose young employee, wearing only a boiler suit and with no other protective equipment, was drenched in a deadly chemical.
Those two convictions expose the absurdity of the law of corporate manslaughter as it currently stands. Corporate guilt rests entirely on proof of the individual guilt of a senior company officer. However reckless or grossly negligent the company as a whole may have been, it will escape conviction if no individual person—no "controlling mind" of the company—can be found guilty of manslaughter. The law is thus biased against small "one-man band" companies, in which it is easier to identify the individual manager or director who is to blame. Large companies escape because the accident is due not to the failure of an individual, but to the collective failure of the company's management systems. The bigger the company, the less chance there is of a successful prosecution.
I believe that only imposing duties on the most senior officers of a company will ensure that safety is given the same priority as profit. Safety awareness, and the great responsibility that it entails, should lie with those at the top—the chairman and managing director—and not with the employees, such as train drivers or ships' crews, who are always put up as the fall guys.
In 1996 the Law Commission recommended proposals for reform, including those advocated in the Bill. On 1 February this year, in its report on the work of the Health and Safety Executive, the Select Committee on the Environment, Transport and Regional Affairs recommended
that the government brings forward legislation to introduce a crime of corporate killing as soon as possible.
I know from answers that I have received to parliamentary questions that the Government have been considering the matter. After I gave notice of my Bill, I was pleased to read in The Sunday Telegraph this week that the Government expect to publish their proposals for consultation in the next few weeks.
The Bill would put the directors of companies that kill in the dock to answer for their actions and failings. If convicted, they would face not only the full rigours of the law, but the equally important power of the court to order them to put matters right for the future.
The Bill's purpose is not to bash responsible companies but to promote safety. Many companies do a good job, and look after their employees and the public properly. However, some do not, and they use loopholes in the law to escape their just desserts.
If we are to prevent further tragedies such as the Hillsborough disaster, the Clapham, Southall or Paddington train crashes and the Bradford City, King's Cross or Piper Alpha fires, tough new laws must be introduced. The Bill provides for that. Public confidence in industry and in the enforcement authorities suffers when the perpetrators of serious accidents escape prosecution on a legal technicality instead of having their culpability tested in court according to the standards that apply to a private individual on a charge of manslaughter. The Bill provides for that test, and I hope that the Government will accept it. The public expect nothing less from the Government, and I am sure that they will deliver.

Questions put and agreed to

Bill ordered to be brought in by Mr. Andrew Dismore, Mr. Martin Salter, Ms Karen Buck, Mr. Michael Clapham, Mrs. Gwyneth Dunwoody, Mr. Gordon Prentice, Mr. Andrew Miller, Mr. Lawrie Quinn, Ms Claire Ward, Mr. Iain Coleman, Mr. Stephen Pound and Siobhain McDonagh.

CORPORATE HOMICIDE

Mr. Andrew Dismore accordingly presented a Bill to create a new offence of corporate killing to replace the offence of manslaughter in certain cases where death is caused without the intention of causing death or serious injury: And the same was read the First time; and ordered to be read a Second time on Friday 5 May, and to be printed [Bill 114].

Orders of the Day — Postal Services Bill [Money] (No. 2)

Queen's recommendation having been signified—

Motion made, and Question proposed,

That, for the purposes of any Act resulting from the Postal Services Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred in consequence of the Act by the body to be known as the Postal Services Commission.—[Mrs. McGuire.]

Mr. Richard Page: I am apprehensive about the money resolution. The Financial Secretary is busy today: he must tackle not only the money resolution to the Postal Services Bill, but also that to the Fur Farming (Prohibition) Bill. We can be justifiably apprehensive about granting permission for a blank cheque. In Committee, we spent a long time trying to determine the cost of the commission. We tried to glean from the Minister whether there would be some limit on the number of members. We later discovered that they would be paid £10,000 each for their work during the year. However, amendments to resist that amount of expenditure were blocked, and the Government used their majority to allow an open-ended position.
The Government stressed the figure of £400 million which would be saved through automated credit transfer, thus causing anxiety to sub-post offices. The Government were enthusiastic about that and did not wait for the report of the performance and innovation unit on what could be put in its place and the sort of revenue that would be available to mitigate the loss.
We shall debate new clause 1 later. We welcome it as far as it goes. We have no idea whether the commission will be part of the delivery mechanism that will follow from it. If that is the case, what sums will be involved—£20 million, £30 million or £100 million?
The Financial Secretary has glibly and easily slid in the money resolution, which is, in effect, a blank cheque, as hon. Members will see if they care to examine it. I ask the Minister to consider whether he can impose some limits on it. We want to know whether the commission will be the vehicle to fund new clause 1.
The Government's record on controlling the expenditure of new bodies is not good. I have only to remind the House of what has happened to the budget of the Office of Gas and Electricity Markets: it was intended to be £29.8 million, but it is now estimated that it will rocket to £64.5 million. An increase of more than 100 per cent. in one year is predicted. Given that we have a blank cheque and we do not even know the commission's estimated cost, I confess that I am exceedingly apprehensive. The Minister must put more flesh on the bones before the House will be prepared to sign the blank cheque.

Mr. Patrick McLoughlin: We are slightly apprehensive about the money resolution, so, before the Bill completes its remaining stages in the House, the Minister should explain the unusual step of introducing it now. Money resolutions are nothing new,


but they are usually dealt with on Second Reading. As a result of changes in the previous Parliament, money resolutions are not debatable if dealt with on Second Reading—they merely go through on the nod—so the Minister should explain why the Government have used this unusual procedure.
If, as my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said, that procedure has been used solely because of new clause 1, the Minister should explain, and possibly apologise for, the way in which the Secretary of State misled the House on Second Reading. He gave an assurance that the subject of new clause 1—which is the reason why the money resolution has been tabled—would be introduced in time to be dealt with in Committee.

The Secretary of State for Trade and Industry (Mr. Stephen Byers): Wrong again.

Mr. McLoughlin: As Hansard reported, the Secretary of State said that amendments would be tabled in Committee. From a sedentary position, he says that I am wrong, but he should read his own words, as I did last week.

Mr. Byers: The hon. Gentleman is wrong because the reason for tabling the money resolution has nothing to do with the subsidy provision that we intend to introduce under new clause 1.

Mr. McLoughlin: I am grateful to the Secretary of State for that clarification, but he does not disagree that, on Second Reading, he said that the subject of new clause 1 would be dealt with in Committee. He says that the money resolution has nothing to do with new clause 1, but it is wide-ranging and covers "any expenditure" arising from the Bill. Supplementary money resolutions are often proposed if the Government come up with new ideas. Perhaps he is telling us that the proposals in new clause 1 are not new. The Government should explain why they have introduced the money resolution just before we complete the Bill's remaining stages and why it was not introduced on Second Reading.

Mr. Tony Baldry: Although I sat through the whole of the Committee stage on the Bill, I cannot recall the Minister explaining that there would be a need for a money resolution. It is curious that we had no mention of the new money resolution in Committee if there was a need for one on Second Reading.
The Secretary of State said that my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) was wrong to assume that the fact that new clause 1 has within it a subsidy is the reason for the money resolution, but the procedure this afternoon is curious. Many of us will listen with interest to what the Minister has to say in justifying the money resolution at this time. One can assume only that he has been advised by lawyers that, if new clause 1 becomes part of the Bill, he will require a money resolution.
Clearly, we will discuss new clause 1 shortly, but I am surprised. Perhaps the Minister will tell me if I have it wrong, but, so far as I can recollect, at no time in Committee did we ever discuss the need for a money resolution. Indeed, at no stage did the Minister give the Committee any indication of the sums of money that it would be necessary to find from the public purse, and, hence, of the need now for a money resolution.

The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Alan Johnson): First, I did say in Committee that there would be a need for a money resolution. The hon. Member for Banbury (Mr. Baldry) attended very—

Mr. Baldry: Assiduously.

Mr. Johnson: Assiduously, but perhaps the hon. Gentleman was not there on that particular occasion. However, as the hon. Member for South-West Hertfordshire (Mr. Page) will verify, I did say that there would be a need for a money resolution on Report.
The second money resolution is necessary to ensure that it is within the scope of the Bill to make provision for payment out of money provided by Parliament of expenditure incurred by the Postal Services Commission. As we explained in Committee, it is a new initiative in postal services. It is also the first time that we have had a regulator that consists not of one person, but of a committee. I think that, following a review of utility regulation some time ago, there was all-party support for that.
It is impossible to judge exactly how much money the commission will need, but its cost will be paid by the operators in the universal service area, which means that the Post Office will meet the full cost of that. Therefore, the cost that will be incurred as a result of the Bill will not be materially affected. Rather, it affects the financial systems and procedures.
The Government's intention is that the commission will be a non-ministerial Government Department with its own vote, putting it on a similar footing to the utility regulators in that respect. We will discuss an amendment on similar funding for the revamped consumer body. Technical amendments have been tabled for consideration on Report to effect that change.
As my right hon. Friend the Secretary of State said in an intervention, the necessary authorisation on the subsidy clause was provided under the first money resolution, taken after Second Reading on 15 February. That, among other matters, authorised the payment of any expenditure incurred by a Minister of the Crown or Government Department in consequence of any Act resulting from the Bill. Any scheme under that clause as drafted will require the approval of Parliament, so I urge the House to accept the second money resolution.

Question put and agreed to.

Resolved,
That, for the purposes of any Act resulting from the Postal Services Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred in consequence of the Act by the body to be known as the Postal Services Commission.

Orders of the Day — Postal Services Bill

As amended in the Standing Committee, considered.

New Clause 1

SUBSIDY FOR PUBLIC POST OFFICES

'.—The Secretary of State may by order make a scheme for the making of payments for the purpose of—

(a) assisting in the provision of public post offices or public post offices of a particular description, or
(b) assisting in the provision of services to be provided from public post offices or public post offices of a particular description.

(2) A scheme under this section which provides for the making of payments for a purpose falling within subsection (1)(b) shall ensure that no such payments may be made unless the person deciding whether to make the payments considers that the provision of the services concerned from public post offices or public post offices of a particular description would assist in the provision of public post offices or (as the case may be) public post offices of that description.

(3) Payments under a scheme under this section shall be made by the Secretary of State or by another person out of money provided by the Secretary of State.

(4) A scheme under this section shall specify—

(a) the descriptions of payments which may be made under the scheme,
(b) the descriptions of persons to whom such payments may be made,
(c) the person by whom such payments may be made,
(d) criteria to which that person is to have regard in deciding whether to make such payments, and
(e) the amounts of such payments or the basis on which such amounts are to be calculated.

(5) A scheme under this section may, in particular, provide for—

(a) payments under the scheme to be made subject to conditions specified in or determined under the scheme (including conditions as to repayment),
(b) the delegation of functions exercisable by virtue of the scheme (including the delegation of any discretion conferred by virtue of the scheme),
(c) the modification of the functions of a body established by an enactment, or the functions of the holder of an office created by an enactment, for the purpose of enabling the person concerned to exercise any functions conferred on that person by virtue of the scheme,
(d) the payment by the Secretary of State of fees to any person in respect of functions exercised by that person by virtue of the scheme.

(6) The power to make a scheme under this section shall not be exercised without the consent of the Treasury.'.—[Mr. Byers.]

Brought up, and read the First time.

The Secretary of State for Trade and Industry (Mr. Stephen Byers): I beg to move, That the clause be read a Second time.

Madam Speaker: With this it will be convenient to discuss the following: Amendment (a) to the proposed new clause, in line 1, leave out "may" and insert "shall".
Amendment (b) to the proposed new clause, in line 35, at end add—
'(7) The Secretary of State shall make an order under this section within three months of the commencement of this Act'.

Amendment No. 71, in clause 41, page 27, line 14, at end insert—
'and—
(c) their financial viability'.
Government amendments Nos. 34, 42, 44 and 46.

Mr. Byers: The hon. Member for West Derbyshire (Mr. McLoughlin) was right to say that on Second Reading I said that we wished to introduce a clause to provide the opportunity for a subsidy to be made available to the post office network. I said that I hoped that we would be able to do that in Committee, but we did not table a new clause in Committee, and I apologise to the House for the fact that we did not have an opportunity to do so.
I took the decision—some hon. Members may criticise me for it—that a new clause providing a subsidy would be so significant that it would be better for it to be debated on Report by the whole House. More hon. Members will be able to debate the matter on Report than would have been able to debate it in Committee. I was trying to provide as many opportunities to participate in the debate to as many hon. Members as possible. That is why the new clause is being debated on Report.

Mr. Patrick McLoughlin: I am grateful to the Secretary of State for being so open and honest with the House in saying that this debate should be an opportunity for the whole House to discuss the provision. However, as the matter was so well thought out and so much in the Department's mind, will he just remind the House when the Government tabled the new clause, so that we could consider it properly? Was it tabled in good time to allow us to consider it, or not until after last week's Opposition day debate, which put more pressure on him?

Mr. Byers: Considerable pressure was, of course, caused by last week's half-day Opposition debate, but that pressure was perhaps not so great as that caused by the 3 million signature petition organised by the sub-postmasters, or the very effective lobby of Parliament that they conducted last Wednesday. That probably brought far more pressure to bear on the Government than did a three-hour debate on these important issues.
As the hon. Gentleman will know, new clause 1 was tabled with all the other Government new clauses and amendments. It was prepared earlier, but, as is often the custom, the Government tabled all the new clauses and amendments in one batch. We have consistently dealt with this matter in that manner.
I shall now deal with the substance of new clause 1.

Mr. Peter Lilley: Is the right hon. Gentleman saying that he did not table new clause 1 before Parliament debated the matter because he thinks that parliamentary debates are so irrelevant and ineffective that Parliament should be ill informed and not consider the relevant clauses when it considers the matter—as it did last week, both in Westminster Hall and in this place?

Mr. Byers: No. The right hon. Gentleman, perhaps deliberately, misunderstands the point that I am trying to make. I felt that it was more appropriate that the whole House should have the opportunity of debating a subsidy


for the post office network on Report, rather than my reserving the debate for hon. Members who happened to serve on the Standing Committee. Many hon. Members who are now in the Chamber did not serve on that Committee, but may wish to participate in the debate. I feel that they should have the opportunity to do so.

Mr. Simon Burns: The Secretary of State is saying that Parliament should have the opportunity to debate this important issue. Although he may rely on that reason, he made a commitment on Second Reading. He may have decided just after Second Reading that the matter was too important for the Committee alone to deal with, but he has had plenty of time since then to table the new clause. Why did he not, as my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) said, table the new clause before last Wednesday, when the House had the opportunity to debate the matter both in Westminster Hall and on the Floor of the House? The House could have fully debated the issue twice—both in last week's debates and, today, on Report—thereby having two bites at the cherry.

Mr. Byers: The record will show that my comment on Second Reading came in reply to a very specific question from the hon. Member for West Dorset (Mr. Letwin), who asked whether the Bill would provide for a subsidy. I answered as truthfully as I could. I said that we had hoped that we would be able to table a new clause to that effect.
I think that the hon. Member for West Dorset would agree that last week's debates in Westminster Hall and in the House were on the broad principles of the support that should be given to the post office network, not on the detail that we are now considering on new clause 1. I think that it would be far better for the House if we were now to consider the detail of the new clause, rather than wondering whether it would have been better to deal with that detail in Committee, in Westminster Hall or in last week's Opposition day debate.

Mr. John Bercow: Will the right hon. Gentleman give way?

Mr. Byers: Not on that point, as I should like to make some progress. The hon. Gentleman will undoubtedly try to catch the eye of the occupant of the Chair in this important debate.
4 pm
New clause 1 is significant. As I said in the House on 12 April:
The power is a safeguard, intended to keep open the option of financial assistance.—[Official Report, 12 April 2000; Vol. 348, c. 385.]
We feel that it is appropriate to have such a safeguard, for two reasons. First, it is not every year that the House has the opportunity to debate a Bill on postal services, so it seems appropriate that we should use the opportunity to provide the Secretary of State for Trade and Industry with the power to establish the type of scheme outlined in new clause 1.
Secondly, there is concern among sub-postmasters and mistresses in rural communities and inner-city areas about the effect of moving to a system of automated credit transfer between 2003 and 2005. The Government acknowledge the concerns that exist following the adoption of that policy. It may be that, at some future date, it would be appropriate to establish such a scheme, and that is what new clause 1 seeks to do.

Mr. David Prior: If the Secretary of State were considering buying a post office and he was told that the Government were keeping open the option of providing financial assistance at some unspecified date in the future, would that give him the confidence that he would need before going ahead?

Mr. Byers: Yes, it would. For the first time, we will have in statute the power for the Secretary of State to make such payments. At the moment, the Post Office has a degree of social responsibility and is prepared to make a subsidy available to the post office network. It has done so in the recent past. We are giving the Post Office a new commercial freedom. Within that context, it may feel that it does not have the responsibility to meet social obligations, and that it would rather the Government, or some other agency, had that power or responsibility.
New clause 1 supports the clear distinction that is being made between the commercial role of the Post Office in future and the social and wider role that the post office network can play. That raises the important issue of who should fund the post office network to meet those social obligations, or any new services that the Government may feel the network is suited to provide. Our vision for the post office network in the future is that it begins to broaden its role, responsibilities and functions. I know that postmasters and mistresses are keen to develop a new role for the post office network, and perhaps a subsidy could be the appropriate way of supporting such a role in the future.

Mr. David Chidgey: Does the Secretary of State recall giving a commitment that it was the Government's intention to continue to maintain a national network of sub-post offices? Does the right hon. Gentleman recognise that many post offices—particularly in my constituency—depend on the service we are discussing, and that 30 to 40 per cent. of their work is wrapped up in it? Does he envisage a subsidy of that level to maintain the network?

Mr. Byers: We will want to discuss with the various interested parties the nature of any scheme that might be introduced. I know that there is concern about the implications of ACT. That is why we have said clearly that pensioners and benefit recipients who now get cash over the counter at post offices will continue to have that choice—not just until 2003, or between then and 2005, but thereafter.
It is for postmasters and mistresses to say to people that they must make it clear that they want to continue to have their benefit or pension paid in cash at the post office, and that that choice will remain. Many are doing that. There is real potential for people to maintain a high level of income and support for the post office network and the way in which benefits are paid.

Mr. Bercow: I am grateful to the right hon. Gentleman for giving way, because he is a trifle opaque in his presentation of the argument. Who is the mysterious person referred to in new clause 1(2)? Will the Secretary of State confirm, notwithstanding what he said in the Opposition day debate last week, that the clause is purely permissive, not prescriptive, and offers no guarantee to beleaguered post offices in Stewkley, Marsh Gibbon and elsewhere in my constituency? Will he therefore tell the House now whether any regulations flowing from the new clause will be subject to the negative or the affirmative procedure?

Mr. Byers: The hon. Gentleman is being slightly opaque in raising some of those issues. My understanding is that the regulations will be dealt with under the affirmative procedure, and I hope that I will be able to confirm that point in due course. We will be able to have a useful debate and constructive dialogue about the important issues concerned. The scheme will be permissive and there will be no obligation to introduce it. However, when the power to introduce such schemes lies on the statute book, I have no doubt that the Secretary of State will be under considerable pressure between now and 2003 to introduce one. It is appropriate that such pressure should be brought to bear, and whoever holds the office will no doubt respond positively to those developments.

Mr. Ieuan Wyn Jones: Does the Secretary of State understand the concerns of sub-post office owners who are deciding whether to expand and invest or sell up and retire? On the one hand, they have the certainty that in 2003 they will lose a substantial proportion of what they are paid for the service they provide in making pension and Benefits Agency payments. On the other hand, they have the uncertainty about whether a subsidy will be paid. What advice would the Secretary of State give to people in that quandary?

Mr. Byers: For the first time we are providing a power for the Secretary of State to introduce a scheme. We will want to discuss the nature of any such scheme with interested parties, including representatives of sub-postmasters and mistresses. We will debate later whether it would be appropriate to provide that any such scheme should be introduced within a particular period; I do not think that it would. However, I recognise that arguments will be made in favour of establishing a scheme, and after the Bill has received Royal Assent, we will want to work out the details of such a scheme with interested parties.
I should stress that in the interim the Post Office will still have the power to provide support for the network, and that support is given in different ways. For example, Government support is provided to ensure that the Horizon system is put in place.

Mr. Tony Baldry: The Secretary of State is in danger of undermining the Committee system, because hon. Members will not gaily volunteer to serve assiduously on Committees if Ministers keep the most interesting clauses for Report stage.
The right hon. Gentleman keeps referring to discussions with interested parties, but those discussions will be pointless unless people have some idea of what sums might be allocated to the schemes. The new clause specifically states that
The power to make a scheme … shall not be exercised without the consent of the Treasury.
Therefore, the Secretary of State will have to make a bid for a scheme under a public expenditure survey line. Will the Secretary of State confirm that the money will come from the Department of Trade and Industry PES line? When would such a bid be put in and what sums would he envisage bidding for? If he is opaque about that, the suspicion will arise that the new clause is a smokescreen to buy off sub-postmasters and mistresses.

Mr. Byers: The hon. Gentleman shows that he has been out of ministerial office for several years, because PES lines no longer exist. We now live in the world of DEL and AME—the departmental expenditure limit and annually managed expenditure. The scheme would come under DEL, but all Government expenditure is controlled, in one way or another, by the Treasury. The right hon. Member for Hitchin and Harpenden (Mr. Lilley) certainly knows that. That is the situation in which we exist. When a scheme such as this is being established, it is not unusual to specify in legislation that any expenditure linked with it would be subject to Treasury approval.

Mr. David Drew: My right hon. Friend is being very generous in giving way; he appreciates how important this matter is for many hon. Members. I do not want to press him on the detail, as I know that the scheme needs proper negotiation and consultation, but it is clear that there will have to be a test of the viability of bringing sub-post offices into the scheme. I am especially interested in those offices where sub-postmasters and mistresses receive a salary because of the difficulties involved in a pro rata return. What advantage or disadvantage will the new scheme bring for those people?

Mr. Byers: My hon. Friend has been a strong campaigner for the post office network, both in his constituency and more widely. The services offered by a post office and its role in its community will be among the key factors that we will want to take into account when considering whether a subsidy is appropriate. Such matters would need to be considered in the context of any scheme that is brought forward.
For the benefit of the House, and in response to the earlier question from the hon. Member for Buckingham (Mr. Bercow), I can confirm that orders under new clause I will be made under the affirmative procedure. We will therefore be able to engage in the debate to which the hon. Gentleman so looks forward.

Mr. David Heath: I welcome the fact that the Secretary of State is moving in the right direction, as he has recognised that a problem exists. He has said that he can give no time scale for the subsidy, and that he cannot say what amount of money will be involved, but can he offer a time scale for the talks leading to a subsidy? The Government must engage with sub-postmasters and mistresses, and with the Post Office,


to see what can be done—either by the Post Office or through Government subsidy in due course—to resolve the problems that those people face here and now.

Mr. Byers: I take the hon. Gentleman's point. This is an important moment in the development of the post office network. I do not want a long period to elapse between parliamentary approval for this proposal and the finalisation of the details of the scheme.
I would be slightly reluctant to start work on those details before the Bill receives Royal Assent, as difficulties might arise in another place if it were thought that the Government were acting before proper parliamentary approval had been given to setting up the scheme. However, I think that there will be informal opportunities to discuss the form and nature of the scheme, and we could begin that process very soon. If the Bill were to receive Royal Assent by the summer recess, that might be the time to engage formally with the National Federation of Sub-Postmasters about the details of the scheme.

Mr. Brian Cotter: I thank the Secretary of State for giving way so frequently. We welcome the proposed subsidy, although the opacity of the proposal has aroused much concern. On Second Reading, the right hon. Gentleman said that it was likely that the Cabinet Office's performance and innovation unit would produce a report while the Bill was being considered. That report would have helped enormously this afternoon. When will it be available?

Mr. Byers: My understanding is that the unit is still considering some details in the report. It hopes to report to the Prime Minister soon after Easter, and he will then announce his view of its work. The unit is addressing a number of key issues, and the question of access criteria is the most relevant to the Bill. I would have preferred the House to have the opportunity to look at the unit's findings. That would have been appropriate given that access criteria are provided for in the Bill, and I regret that the report is not available at present.
I think that the report has proved to be a far more comprehensive look at the network than was originally intended. That is welcome, because this is an important moment for the post office network. There is a chance to consider a new way for it to develop. The performance and innovation unit report will provide us with the opportunity of looking in some detail at how the network will look, not simply in six months or six years, but in the foreseeable future in the 21st century.

Mr. Bercow: I am grateful to the Secretary of State, who has been customarily generous in giving way. Does he agree that transparency is of the essence here? Given that the new clause refers to payments being made by the Secretary of State or by a person on his behalf, is there not a legitimate anxiety that, unless the access criteria are abundantly clear and specific, the new clause could be used for partisan purposes to provide much needed finance to struggling post offices in marginal constituencies that concern the right hon. Gentleman rather than going to constituencies on the basis of commercial need?

Mr. Byers: I apologise to the hon. Gentleman, because he has already raised the issue of who this mysterious person might be. It could be a number of people, or it could be a body. It could be the Secretary of State, officials designated by the Secretary of State or an organisation such as the Countryside Agency—it depends on the nature of the scheme. Whoever it is will have the authority to make payments under the scheme if that is the way in which the scheme is developed. There is a degree of flexibility. I was going to say, "It could be you"—I did not mean you, Madam Speaker—but unless the electorate changes dramatically, I cannot see the hon. Gentleman being Secretary of State for Trade and Industry for a little while yet. However, he is young, and who knows? His chance may come.

Mr. Gerald Kaufman: I was reflecting on the intervention of the hon. Member for Buckingham (Mr. Bercow). In view of the leak to The Mirror on Monday, I assume that he was referring to marginal Conservative constituencies, because of our prospect of winning a considerable number of them at the next election.

Mr. Byers: I think that that is right. When I saw the leaked document, I was not sure whether it was a deliberate ploy by the Conservatives to lull Labour supporters into a false sense of security. However, as my right hon. Friend knows, Labour supporters are never lulled into a false sense of security—a false sense of insecurity, perhaps.
I now turn to the details of new clause 1, which may answer some of right hon. and hon. Members' questions. The new clause allows the Secretary of State to establish a scheme or schemes for making payments for the purpose of
(a) assisting in the provision of public post offices or public post offices of a particular description, or
(b) assisting in the provision of services to be provided from public post offices or public post offices or a particular description.
The reason for that distinction is that some post offices will, by their very nature, deserve financial support. With other post offices, the services that they provide will be worthy of public support. That touches on the point about the Post Office of the future, in which services might be provided on behalf of the Government. If we wish the Post Office to offer those services, it may be appropriate to provide a subsidy for it to do just that. The new clause allows us to make the distinction between a post office that may be deserving of financial assistance, and a particular service that is provided by a post office.

Mr. McLoughlin: I am uneasy about subsidies that will, by their very nature, mean rules and regulations whereby some post offices will qualify while others will not. Did the Secretary of State consider the possibility of ensuring that sub-postmasters were paid the national minimum wage, which is not currently the case?

Mr. Byers: That is a separate issue, which relates to people who have a contract of employment. I am pleased that the hon. Gentleman is now a strong supporter of the national minimum wage. He voted against it at every opportunity during its legislative passage through the


House, so I am glad that, like the right hon. Member for Kensington and Chelsea (Mr. Portillo), the shadow Chancellor of the Exchequer, he now recognises its benefits. It is a matter of regret that we do not have the hon. Member for Rutland and Melton (Mr. Duncan) with us. I understand that he is in hospital—it is unfortunate that he is not in the Chamber to take part in the debate.

Mr. Bercow: My hon. Friend is listening.

Mr. Byers: If he is listening to our proceedings, he will know that I recognise that he remains a strong opponent of a national minimum wage. However, I am pleased to hear that the hon. Member for West Derbyshire recognises its importance. The answer to his question is that sub-postmasters are not covered by the minimum wage provisions because they are not under a contract of employment.
In addition to the new clause, Government amendment No. 44 makes it clear that the scheme must follow the affirmative procedure, which will allow debate to take place. There are other minor Government amendments, too, that will ensure that the scheme is effective.
I turn briefly to the amendments in the name of the hon. Member for Weston-super-Mare (Mr. Cotter). I think that he seeks to introduce a time limit by which the scheme should be introduced. I do not think that it is appropriate to try to restrict us to three months. We need effective and proper dialogue with all interested parties to ensure that any scheme that is introduced is effective and has broad support among those who are likely to be affected by it.
I am aware that the real concern has arisen in relation to the effects of automated credit transfer. That process will not start until January 2003. There will then be a phased approach to ACT on the part of the Benefits Agency, lasting until 2005. If there is to be a scheme, it is important that we have in place one that can meet the requirements in those circumstances. We will seek to address that possible mischief by developing a particular scheme.

Mr. John M. Taylor: I am grateful to the Secretary of State, who has indeed been generous in giving way.
Before we leave behind us the question of subsidy for certain post offices and the point made by my hon. Friend the Member for West Derbyshire (Mr. McLoughlin) that there will be a disparity between those who are subsidised and those who are not, let us consider the European dimension. Is the right hon. Gentleman aware that many of us are concerned that the Post Office cannot compete as freely as we would like with, for example, German operators? If he is to introduce subsidies to the British arm of that competitive game, will he have to clear them with Brussels? Will we have a long wait while competition issues are deliberated upon?

Mr. Byers: There are two specific matters, both of which are covered in the Bill. The first is the post office network. I would like to think that most right hon. and hon. Members recognise that the power to have a scheme that can provide a subsidy is appropriate in the circumstances. A separate issue is how we can make the Post Office more competitive in the services that it

operates. I have no doubt that the measures that we are introducing through the Bill will ensure that the Post Office becomes increasingly competitive. That is the only way in which it will survive in an increasingly competitive European postal market. That is the challenge that it will face. I have no doubt that it must become more commercially minded. It must be prepared to recognise that it will need to begin to compete in areas that are presently reserved as part of its monopoly. I have no doubt that the situation will change.
When the Postal Services Commission begins to consider these issues, I hope that it will recognise the importance of providing competition that will raise standards so that the public have better service provision. Obviously that needs to be compatible with the universal service obligation, and I am sure that it will be. I am sure that competition will be highly effective.

Mr. Oliver Letwin: rose—

Mr. Byers: I knew that that would have an effect.

Mr. Burns: Will the right hon. Gentleman give way on a different point?

Mr. Byers: If the hon. Gentleman wants to make a different point, I shall give way first to the hon. Member for West Dorset.

Mr. Letwin: I have an entirely different point, too, and have sat patiently in the hope of hearing it answered so that I need not ask the question. Will the Secretary of State explain what the subsidy is intended to achieve? Does he intend it to cover the transition period during which there will be a lack of investment in new technology, is it intended to be a permanent subsidy, or has he not considered which of those objectives he intends to achieve?

Mr. Byers: I had intended to discuss how the subsidy might be used when I addressed the amendment tabled by the hon. Member for Rutland and Melton. Essentially, it is intended to ensure the continued viability of a sub-post office, and it can take a number of forms. A post office may be commercially viable without subsidy, but we might none the less feel it appropriate to provide financial support because we wanted it to provide an additional service on the Government's behalf. In effect, we would pay that post office for doing that, possibly through a subsidy. A range of different reasons might apply, all of which are covered by the wide-ranging provisions of new clause 1, which will allow the Secretary of State to introduce a scheme that will meet those obligations. That is why new clause 1 distinguishes between support for a post office, which will probably have to do with its commercial viability, and subsidy for a particular service that a post office might provide.
I said that I would give way to the hon. Member for West Chelmsford (Mr. Burns).

Mr. Burns: As a former Chief Secretary to the Treasury, the right hon. Gentleman may understand more than most how the Treasury works. I note that new clause 1(6) says that no scheme can be
exercised without the consent of the Treasury.


From the right hon. Gentleman's speech, we have learned that the scheme envisaged in the new clause is highly nebulous. No one, not even the right hon. Gentleman himself, knows how much the subsidy will cost the taxpayer. The Secretary of State must know that the Treasury will never give him an open-ended commitment to provide unlimited public funds. The amounts involved in his two-pronged approach to subsidy could be massive. What discussions has he held with the Treasury, and what assurances or restrictions has the Treasury given him, regarding the circumstances in which it will or will not consent to the scheme?

Mr. Byers: The fact that we can lay a proposal for the scheme before the House is the result of many and various discussions with the Treasury. The Treasury supports the giving of a power for such a scheme to be established, but we shall have to work on the details. The hon. Gentleman is quite right to say that there should never be an open-ended cheque; that would be no way to deal with public finances, and no one would expect the Treasury to offer one. We seek targeted financial support to help with the viability of a post office or to encourage it to provide services of benefit to the Government.
Through amendment No. 71, the hon. Member for Rutland and Melton asks that information about the viability of specific post offices should be given to the commission. That would extend the remit of the commission to providing advice to the Government on the financial viability of public post offices. I ask the House to resist the amendment because I do not feel that that is a correct role for the commission, whose central role is to regulate licensed postal markets and the operators who are licensed, and to give them a primary duty to ensure the universal provision of postal services at a uniform tariff. We should not wish the commission to be diverted from that challenging and important responsibility by having an additional responsibility to provide advice to the Secretary of State on the commercial viability of individual post offices.
I hope that the hon. Member for Weston-super-Mare will not press his amendments to new clause 1, and that amendment No. 71 will not be pressed, either. I hope that all Members can support new clause 1. It will provide the Secretary of State with the power to introduce a scheme to provide a subsidy. Sub-postmasters and mistresses throughout the country will respond positively to the way in which the House has listened to their concerns and has noted the 3 million strong petition that was received last week. The House and the Government are prepared to listen and to respond positively; new clause 1 does precisely that. I ask the House to accept it.

Mr. Richard Page: May I tell the House—especially the Secretary of State and the Minister—that I am sorry that my hon. Friend the Member for Tiverton and Honiton (Mrs. Browning) is not in the Chamber today? Her absence is unavoidable, as she is either collecting her husband from hospital or taking him there. The absence of my hon. Friend the Member for Rutland and Melton (Mr. Duncan) has also been mentioned; as we speak, he is undergoing the attentions of a surgeon who is removing his appendix. No one regrets his absence at this moment more than me.
As the Secretary of State has pointed out, the new clause would enable payments to be made to assist in the provision of public post offices or of the services that they offer. We welcome the measure. I can give the Secretary of State some comfort, because I shall not recommend that we vote against it—although what my hon. Friends do is up to them. However, I should be disappointed if they voted against the new clause.
I am certain that the new clause will receive a widespread welcome; it addresses issues of long-standing concern to people throughout the United Kingdom—in inner cities as well as in rural areas. We make much of the rural problem, but the difficulties are just as acute in some inner-city areas.
Those worries were generated by the Government's thoughtlessness in introducing the automated credit transfer system before establishing how an income for sub-post offices would be provided. The matter has been the subject of innumerable debates in the House; indeed, last Wednesday, there were debates in both Westminster Hall and in the Chamber.
The House will remember Corporal Jones from "Dad's Army"; he was the one who rushed around, saying "Don't panic, don't panic". If the Secretary of State were a little greyer and wore a little moustache, he would look rather like Corporal Jones. Recently, he too has been rushing around saying, "Don't panic"—whether over the money for Rover, when that matter went sadly wrong; over the money for energy that was announced because the coal industry is going wrong; or over new clause 1, which was introduced because of worries in the Post Office. I am sorry to say that the new clause well merits the title of a "Corporal Jones" clause.

Mr. Baldry: At least in yesterday's statement on energy, the House was told how much money would be involved—there will be £100 million for the coal industry. The Secretary of State has given us no indication as to whether the subsidy for the post offices is £10 million, £50 million or £100 million, or whether the whole £400 million savings from the move to ACT will be included. We have been told neither how substantial that subsidy will be, nor what will trigger it. Discussions will apparently be held with a person; we know that that person could be anyone in the world apart from my hon. Friend the Member for Buckingham (Mr. Bercow). In the light of those points, can we be satisfied as to the validity of the new clause?

Mr. Page: My hon. Friend served on the Standing Committee, so he is well aware of all the Bill's provisions. He makes a valid point. Despite the Secretary of State's protestations, unfortunately, the new clause should have been tabled much earlier in the Bill's proceedings. We could then have taken more detailed advice and gone into greater depth on the matter. We could have held consultations—especially with the National Federation of Sub-Postmasters, and obtained more detailed information on their views.

Mr. Bercow: Will my hon. Friend give way?

Mr. Page: If my hon. Friend will hold his horses for 30 seconds, I will of course give way. I believe that the expression "a blank cheque" is a valid and accurate description of the new clause.

Mr. Bercow: As my hon. Friend knows, I am of a naturally suspicious turn of mind. Given the latest demonstration from the Secretary of State of pork-barrel politics that we witnessed yesterday afternoon, does my hon. Friend agree that, whatever the merits of the proposed new subsidy, we simply cannot be certain about its impartial distribution? Is there not a danger that it could be used by a Secretary of State, if not the present incumbent, as a slush fund to bail out beleaguered Labour Members in marginal constituencies?

Mr. Page: My hon. Friend makes his point in his usual delicate fashion. It will not have escaped the Secretary of State's notice that my hon. Friend has a few concerns in this area. I believe that those are justifiable concerns, because the new clause uses the following phraseology:
Payments under a scheme under this section shall be made by the Secretary of State or by another person.
It would really help if we could discover who that "another person" might be. That is another failing that results from the tabling of an amendment of this nature at so late a stage.
Surely the Government would have had no difficulty in tabling the amendment in Committee. It could then have been debated in Committee and it would not have been above the wit and wisdom of the serried ranks of officials that the Minister and the Secretary of State have at their beck and call to devise some small amendment that would have provided an opportunity for the clause to be fully debated on the Floor of the House.
I believe that the new clause is a panic measure. The cost is as long as a piece of string—I might mix all the metaphors and bring in the "blank cheque" introduced by my hon. Friend the Member for West Chelmsford (Mr. Burns). The only time when I felt that the Secretary of State was speaking from his political heart was when he said that the lobby of a couple of thousand postmasters, and the thought of 3 million signatures dropping into the foyer of No. 10 Downing street, helped to concentrate his mind on the matter.

Mr. Chidgey: If I remember correctly, the hon. Gentleman said at the start of his address that he was in favour of a subsidy, although he has now described it as something rather different. Would a subsidised Post Office be part of his party's vision of a privatised Post Office?

Mr. Page: Although it is understandable that the hon. Gentleman wants me to outline our party policy on these measures, he has been in the House long enough to know that it is a remarkably naive shadow Minister who starts to make up policy on the hoof without knowing the exact position that the party that is successful at the general election will face when it takes over and looks at the books. To place such a hostage to fortune on the record now would make me seem greener than I may already be. I certainly will not give that commitment, but I will say

that, in view of the mess that the Government have got themselves into, we welcome this provision in the short term until we find out what the true position will be.
I put it to the House that the Bill is being introduced at completely and utterly the wrong time. It should not have been introduced before we knew the contents of the report by the performance and innovation unit, or before the guidelines on the social and environmental issues had been decided. We should not have been looking at this before knowing exactly the whole question of social exclusion and the problems that will face some rural and urban areas.

Mr. Prior: Is it my hon. Friend's understanding that the subsidy is to replace the income forgone by post offices as a result of the change to automated transfers, or will it be made available for post offices that are undertaking social and community services?

Mr. Page: My hon. Friend makes the flattering assumption that I am a Government Minister and will be able to answer. It is because we have such an opaque new clause before us that my hon. Friend asks the question. I cannot answer it; I do not know. I hope that when the Secretary of State responds he will pick up this point, that perhaps a message will come from afar and he will be able to give my hon. Friend an answer. My hon. Friend makes a legitimate and justifiable point, but I have to fail to give him a response.

Mr. Letwin: Does my hon. Friend agree that at least one definite response can be given to my hon. Friend the Member for North Norfolk (Mr. Prior)? It is that, if the subsidy were intended to replace the entire income, given that it is ungeared and is bringing about no footfall, unlike the current system of benefit administration, it would have to exceed £400 million in order to make good the shortfall.

Mr. Page: I do not know whether that is strictly correct, because the saving of the £400 million involves some administrative costs, such as those for printing the various benefit books. Therefore, I wonder whether the figure would run to £400 million. The calculation becomes a little more delicate and complicated, because pensioners and benefit claimants who go into the post office obtain cash and spend some of it in the shop. I know that sub-postmasters and sub-postmistresses are concerned about losing that extra revenue. I think that my hon. Friend is over-egging it with a total of £400 million, but the loss of revenue in the form of money that will not be spent in the shop is another calculation.

Mr. Letwin: I accept my hon. Friend's well-measured adjustment of my terms. I agree that the sum need not be in excess of a total of £400 million, but does he agree that it is almost inconceivable that the Treasury would ever accede to a continuing subsidy of that order of magnitude in order to try to replace, on a permanent basis, the amount lost? Does he also agree that the Secretary of State notably refused to reply in a clear-minded way when asked whether this was intended to be a temporary, transitional subsidy or a permanent one?

Mr. Page: One of the delights of answering interventions in my stumbling and humble fashion is that
doing so pulls out of order the comments that I shall make in my few, short, immortal words to the House. Therefore, I ask my hon. Friend to relax—[Interruption.] No, not to shut up; my hon. Friend is making a perfectly valid and highly intelligent point, but it is one that I should like to deal with a little later.

Mr. McLoughlin: Will my hon. Friend give way?

Mr. Page: When one's Deputy Chief Whip asks one to give way, one does not have much alternative.

Mr. McLoughlin: Does not this show that the Secretary of State has, to a degree, treated the Committee and the House with contempt? Had it been possible to discuss the matter in Committee, we could more easily have put these questions to the Minister, obtained the answers and had a fuller debate when we returned to the Floor of the House. It is partly because we have not had time to look at the new clause and question the Minister in great detail that we shall be unable to have answers to many of the questions to which we want answers today.

Mr. Page: My hon. Friend puts the point much more forcibly than I have. I simply said that I felt that it would have been better if the whole matter had come before the Committee. As I said, I am sure that a small amendment could then have been made to put it in order for it to be discussed more fully on the Floor of the House. However, the truth is that—I was not joking when I described it as a Corporal Jones clause—nothing happened until 2,000 sub-postmasters and sub-postmistresses descended on the House and on Downing street with their petition. Lo and behold, out came an opaque new clause that might provide the money to help them.
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I endorse the view that it would have been much better to discuss this issue in Committee. Outside of this rather formal setting, we could have had a much more casual and relaxed talk about how the new clause might operate. I wonder whether the Government know how it will operate. I have the horrible feeling that it was made up on the hoof and that only later will we discover exactly how it will work.
This point has been raised, but I wonder whether there have been difficulties in the discussions between the Department of Trade and Industry and the Treasury over the scale of the financial support to be given. Has the DTI, in any shape or form, given the Treasury an idea of how much that support might be? If it has, the Secretary of State will be able to explain why the provision was not introduced when the Bill first came to the House or in the Chancellor's Budget statement. The Secretary of State makes much of annually managed expenditure—AME—but is that extra money or is it already provided for? If it is already provided for, we should know. If it is not, the new clause very much represents legislation on the hoof.
I was going to spend some time saying that it was a disservice and a discourtesy that the provision was not considered in Committee. However, my hon. Friends—particularly my hon. Friend the Member for West Derbyshire (Mr. McLoughlin)—have already made that

point. When the Committee discussed the guidelines on social and environmental matters, I stressed several times how important it was that we knew what would be in them, so that we could help to frame the legislation. However, there was a rush to legislate and the country's requirements were deemed to be just something else to worry about.
The new clause has raised considerable expectations among those who run sub-post offices and their consumers. I hope that those expectations will not be disappointed, but the Government do not have a good reputation on that. They have a good reputation for spinning a good story, but, once the mists have dissipated, we find that real improvements have not been secured. It is up Ministers to ensure that they are and that those expectations are not disappointed.

Mr. Roger Gale: Does my hon. Friend think that this late offer, with no sign of how long it will last, will repair the damage that has been done to the potential sale of sub-post offices to new owners? Will it prevent the closure of sub-post offices that is taking place at the moment?

Mr. Page: I am afraid that it will not. We must remember that £2 billion of privately owned money is in sub-post offices.

The Minister for Competitiveness (Mr. Alan Johnson): The figure is £1 billion.

Mr. Page: The figure has obviously depreciated considerably since I last heard it, but the hon. Member for Weston-super-Mare (Mr. Cotter) has also touched on this issue. Until the Government put more flesh on new clause 1, no one will want to consider buying or exchanging a sub-post office, unless they are remarkably rich or remarkably brave.
As the Secretary of State pointed out, nestling among the Government new clause and amendments is our amendment, No. 71, which would introduce the concept of financial viability. Had we known that new clause 1 was to be tabled at such a late stage, and had we known about its contents, we might have redrafted our amendment. The future of the post office network has been a concern of right hon. and hon. Members on both sides of the House for many years, as my hon. Friend the Member for North Thanet (Mr. Gale) said. Post offices' survival is critical to the well-being of people not only in rural areas but in inner cities. That is why Ministers of successive Governments have been called to the Dispatch Box many times over the years, and never more frequently than in the past few months, when there have been debates on the subject not only on the Floor of the House but, last week, in Westminster Hall. There is no reason for me to apologise for going over the ground again.
When I first read new clause 1, I thought that my hon. Friend the Member for Rutland and Melton and I might have to apologise for having charged the Government last week with lacking a coherent structure for the future of sub-post offices. When I read the new clause again, I realised that although, as my hon. Friends have pointed out, it makes welcome gestures towards the support of public post offices, it is remarkably lacking in substance and the House cannot assess the merits of the scheme in


detail. Nothing that the Secretary of State said at the Dispatch Box has given us further insight into how the scheme will work.
As my hon. Friends have pointed out on several occasions, the Secretary of State will take the powers necessary to subsidise those post offices and support the services that they provide. He—or, perhaps in future, she—will be able to prescribe what payments will be made for those purposes, to whom they will be made and the criteria to be adopted in making them. The amounts have yet to be determined. The right hon. Gentleman may delegate those roles to a subordinate body.
My hon. Friend the Member for Buckingham (Mr. Bercow), who has left the Chamber for a moment—no doubt he has gone to recharge his batteries—pointed out that those provisions might be a substantial source of party political bias. I hope that the Secretary of State will ensure that there is a proper arms-length method for applying those criteria and making payments. Hon. Members on both sides of the House must be satisfied on that point because the wheel will turn, the Conservative party will be back in government and the Secretary of State will be on this side of the Chamber with his nose pressed against the window of government. He will want to be sure that he has put in place a system that is seen to be fair, open and accountable. As I said, it would have been sensible to establish the scheme in Committee, rather than on Report.
I genuinely want to try to help the Secretary of State to fulfil his good intentions. Ever since his unfortunate experience with BMW and the Rover car company, I have thought of him as sharing the view of the famous playwright, Eugene Ionescu, that one can predict the future only after it has happened. The Secretary of State tends to take action when he should be planning ahead.
My hon. Friend the Member for Rutland and Melton and I tabled amendment No. 71, which would require the Postal Services Commission to advise the Secretary of State on the financial viability of public post offices serving communities throughout the country. It is pointless devising schemes to subsidise the network if accurate information is not available to the Secretary of State about the financial state of the post offices in our cities, towns and villages.
I had to smile slightly a moment ago when the right hon. Gentleman distanced the role of the commission from all this. Having read the Bill and taken part in the debates, I believe that the commission and, to a lesser extent, the council will have a pivotal role in deciding which post offices provide a vital service and should be kept in place. The amendment would place an explicit requirement on the Postal Services Commission to collect financial information and provide advice to the Secretary of State on its findings. That would be done after the commission had consulted the Consumer Council for Postal Services.
I fully expect that other bodies, such as the National Federation of Sub-Postmasters and the Countryside Alliance, will make representations to the Secretary of State before he comes to any decision about the scale of assistance that he is prepared to offer. I hope that he will answer the point made by my hon. Friend the Member for Solihull (Mr. Taylor) when he asked whether EU approval was necessary. The Secretary of State has rather fallen foul of EU approval on various announcements that he has made recently.
It would give encouragement and hope to sub-postmasters and postmistresses if they knew that the money was definitely coming and would not be subjected to the machinations of another organisation. That would go some way towards mitigating the concern of my hon. Friend the Member for North Thanet about the viability of sub-post offices.
The Secretary of State will certainly need information about financial viability if he and the House are to take a well-judged view on the future of the post office network. Collecting the information should cause no difficulty to the Postal Services Commission, which will collect plenty of information anyway. It has a duty to collect information if required, and it can do so of its own accord.
I hope that the concerns of those who provide and use postal services are truly to the front of the Government's mind, and that the Minister will have second thoughts about a sensible amendment that will help him to achieve the objectives which I am sure he seeks.
As a matter of principle, it is fair to put it on the record—this may help the hon. Member for Eastleigh (Mr. Chidgey), who asked whether the Conservative party was in favour of subsidies—that we share the view of the National Federation of Sub-Postmasters in its desire for income, not subsidies, for post offices. The new clause is needed only because the Government are proceeding with their disastrous policy switch to ACT, which threatens the survival of thousands of sub-post offices across Britain. As we know, the 3 million signatures on the petition were not calling for subsidy.
I shall put on record the reaction of the National Federation of Sub-Postmasters to new clause 1. It stated:
subpostmasters want to have a commercial living in viable and vibrant post offices. The prospect of existing on a subsidy therefore will not be a very pleasant one for them. We are however encouraged that the Government are looking for ways of supporting a network of post offices and if matters get to such a point then clearly subsidies, particularly temporary ones, may help to get the network through a very difficult phase.
The statement continues:
We would set our face completely against local authorities giving subsidies because we think that we would rapidly lose control over the network as different local authorities will most certainly deal differently when faced with the need to subsidise and we must not forget that different local authorities may be under different political control. We cannot therefore work up any enthusiasm for that prospect.
We would say the answer to the network is investment, not subsidy, allowing us time to get through this difficult period and out the other end. As they say, give a man a fish and he will eat for a day, give him a fishing rod and teach him to fish and he will eat for a lifetime.
Do the Government intend subsidies to be paid by local authorities? Will they give sub-postmasters that fishing rod, so that they can have financial viability and independence?
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On Second Reading, the Secretary of State said:
We should not jump to the conclusion that we should always look for a subsidy from central Government. Other public organisations such as local authorities may want to invest if they think it is appropriate to provide a subsidy but, as we are introducing a Bill that we would like to think will be on the statute book for a good number of years, it is sensible to cover all possibilities.—[Official Report, 15 February 2000: Vol. 344, c. 805.]


In the event of subsidies' being paid, how will the Government ensure equity, so that one post office is not disadvantaged by another's receipt of subsidy? I believe that that balance—that equity—is most important.
Although at the outset I welcomed the new clause in principle, it is not apparent why a new clause drafted in such general and unspecific terms was not included in the Bill at the start. It would have been preferable for us to be able to examine it more closely in Committee, and to hear from the Secretary of State or the Minister the details that lay behind it. Is it, in fact, such a last-minute panic measure that Ministers do not know what the back-up will be, and how the new clause will work?
Perhaps the belated appearance of the new clause is due to a disagreement between the Treasury and the DTI about the scale and terms of the financial support that will be offered to the post office network. Perhaps, like my hon. Friend the Member for Aylesbury (Mr. Lidington), I am unduly suspicious, but the Minister has still not given a good explanation of why the provision was not announced on Second Reading—or, indeed, of why the Chancellor of the Exchequer did not mention it in his Budget statement. The sums involved are surely of a size to merit some attention in a Budget statement.
The new clause will have raised considerable expectations throughout the country among those running sub-post offices. It will also have raised expectations among customers hoping that their post offices will be saved. I hope that those expectations will not be disappointed. It is one thing to enter into broad, vague, nebulous commitments of the kind envisaged in the new clause; it is a quantum leap to carry them into positive effect.
Once the mist engendered by this exercise has dispersed, those people will want to see real results. They will want to see post offices that have been threatened with closure saved, and new ones opening. It is up to Ministers to ensure that, if public money is used for this purpose, such benefits occur. If they do not occur, and are not seen to occur, the House and the country will know that this has been little more than a public-relations exercise.

Mr. Drew: Unlike Conservative Members who have given the new clause a curmudgeonly welcome, I give it, along with the Government amendments grouped with it, a warm welcome. This is an important initiative and, if the Government are accused of having listened, so much the better. There has been a major campaign, led—dare I say—by the Western Daily Press in my area, and taken up by many other newspapers and media outlets. It has touched a raw nerve. We all know about the problems from which sub-post offices suffer. There is a wonderful irony in being lectured by the Opposition. They accuse us of precipitate action yet they failed to tackle the problems. They had 18 years in which to act, but they did not intend to pursue the policy that the new clause outlines. It is mildly amusing that they will vote in favour of it—or, at least, not against it—while Conservative Front-Bench Members maintain that they support privatisation. I do not know how they resolve that contradiction.

Mr. Lilley: In welcoming the new clause as a major step forward, does not the hon. Gentleman tacitly admit

that Government policy of compelling people to have benefits paid into bank accounts instead of a post office potentially threatens the post office network, thus making the subsidy necessary? Without the policy, the new clause would be neither necessary nor a major initiative.

Mr. Drew: We have held that debate so often in the past, I hoped that the right hon. Gentleman would have got it right by now. There is no compulsion; people from the Prime Minister down have the right to choose the way in which they wish to draw their benefits. That will remain the case. If we changed that, it would not stop the decline in the sub-post office network. The new clause gets to the root of the problems. We need some form of subvention, for which the details need to be worked out. The Government are pledged to do that, and we should therefore welcome the new clause and consider its implementation.
I agreed with the hon. Member for South-West Hertfordshire (Mr. Page) that having the performance and innovation unit report would help. It would tease out some of the details that we require. The report is a major piece of work for which we have waited for some months. The longer we wait, the more detail it will hopefully contain. It will then better be able to show the way in which new clause 1 can be implemented.

Mr. Letwin: Like me, the hon. Gentleman has participated in many debates on the Bill. Does he support permanent subsidies to sub-post offices as a way forward in principle?

Mr. Drew: If the hon. Gentleman will allow me to advance my thoughts, I shall explain my approach. I do not oppose the idea that the Government should provide more income to help the sub-post office network, which clearly needs additional income. I do not mind whether the money is a subsidy or in a different form. The campaigns and speeches of hon. Members from all parties have alerted us to the problem, and the new clause presents a method of dealing with it. I hope that I can explain that briefly.

Mr. Peter Bottomley: The question of payment—subsidy or not—arises because decisions between Departments have resulted in the withdrawal of £400 million from the sub-post office network. How much of that sum should be replaced by payments under new clause 1?

Mr. Drew: I cannot give a categorical answer about the money because that is up to the Government Front Bench, but I hope that we will think ahead about the extent to which we can help individual sub-post offices while maintaining the overall network.
I believe that the Minister for Competitiveness agreed with the view that I expressed in an Opposition day debate last week. We must strike a balance between the amount that we grant individual sub-post offices to help them through temporary difficulties or to find methods to build for the future and the way in which we help the whole network. My answer is to increase the speed of the evolution of smart cards. I do not believe that that will be achieved entirely by the public sector, but it might be done by the public and private sectors in harness. I should like that to happen.
The Opposition have created difficulties for us. There is nothing wrong with that in some respects, but they have sold their view that our policy is ACT or nothing, and that has made it more difficult for us to present our case to the sub-postmasters and mistresses. Some of us have always believed that ACT should be considered in addition to the obvious answer: the evolution of the smart card. My right hon. Friend the Secretary of State can speak for himself, but we heard clarification on that matter during the debate initiated by the Opposition last week.

Mr. Letwin: Will the hon. Gentleman give way?

Mr. Drew: If the hon. Gentleman will please excuse me, I must continue.
The nub of the debate is the degree to which the Government can support investment in the smart card as we would want it to be and the way in which they can help individual sub-post offices. We must decide how best to use our money and how to influence the sub-post office structure to keep the universal service obligation. I have already said that I wish that I knew how the official Opposition would keep it if they followed their route of privatisation. We must keep the entrepreneurial spirit of individual post offices alive while giving support through the pay structure and the other ways in which payments are made already.
Such matters are complicated, but a considerable number of community sub-post offices already rely—not exclusively, but to a large extent—on a subsidy or a salary payment. That is what I was trying to get at in my question to my right hon. Friend the Secretary of State. We can enhance and extend that system, but our proposals must be clear. The discussions need to be based on that fact and taken forward from there. The detail will emerge from the consultations and negotiations, but, as well as providing stability and value for money, the system must be fair and transparent. All those issues are important. They must be talked through with the various organisations that will have both a part to play and a view on the proposals.
I welcome new clause 1. We should recognise that structures will change, but that is not the only way forward and in no way do I wish to denigrate the many thousands of businesses that make up the sub-post offices network. Some people or businesses already own a succession of sub-post offices, which may provide stability, but I want to see the community enterprise idea alive and well. That may be a way to retain services in villages and suburban areas, but it may also allow us to reintroduce them. That is happening in villages in my constituency. The village shop in Whiteshill has close links with the sub-post office and Coaley provides an example of how services—the most important of which is the postal service—could be reintroduced. If a village shop can work in harness with the sub-post office, there is much more chance of the service being retained.
New clause 1 represents an important new dimension to the discussion and the proposals cannot be introduced soon enough because we are losing sub-post offices. That is nothing new and there are no quick fixes. If there were, I presume that the previous Government would have produced some, but they failed lamentably. It is important to guarantee the universal service obligation, which is what the Bill is largely about. We have put on record the

fact that we want a network of sub-post offices, for now and the future, and the proposals constitute the way in which that should be done.
It is important to strike a balance in the debate. Some of us have watched it assiduously and have made suggestions and it is good that the Government have listened not only to the campaign outside, but to what hon. Members on both sides of the House have said. That is why new clause 1 should be welcomed unreservedly. Rather than go on the defensive, we should begin to enhance the chances of our sub-post offices so that they have a genuine future.

Mr. Cotter: I am sorry to hear that the hon. Member for Rutland and Melton (Mr. Duncan) is unwell and I am sure that we all wish him well. The hon. Member for South-West Hertfordshire (Mr. Page) made up for the hon. Gentleman's absence—he spoke for two, given the time that he waxed lyrical. I thank the Secretary of State for introducing new clause 1, which represents a welcome gesture for sub-post offices.
As the hon. Member for Stroud (Mr. Drew) has said, we have had many debates on the matter. I could rehearse all the arguments, but I shall not do so because they are on record. There is still a serious issue about sub-post offices. I am glad that the Secretary of State accepts that the performance and innovation unit report is key. I hope that it will advance the debate quickly, once we have it.
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I congratulate the Secretary of State on the open way in which he was so opaque. His opacity and openness have been the striking part of the debate so far. He achieved a delicate balance, and he did it extremely well. In tabling the amendments, the Liberal Democrats are endeavouring to strengthen the new clause. We welcome what the Government have come forward with, but we need a much clearer answer from the Secretary of State. It has been a rather rushed job. The decision had to be made to come forward with something, but we need the detail.
Confidence is the clear and concerning issue for those small businesses, the sub-post offices. Without confidence, customers will find other routes, as they are doing, to meet their needs, but, most particularly, sub-postmasters and mistresses do not feel that they can invest in something that will be viable and there in the long term.
The new clause leaves an area of uncertainty. More precisely, we had the feeling that the introduction of the subsidy could not start before 2003, or at least it seems that it could not. Our amendment would oblige the Secretary of State to make an order under the section within three months of the commencement of the Act.
We ask just for an announcement. We do not necessarily expect such a scheme to start within three months of the commencement of the Act, but it is not unreasonable to look for an announcement, which could reassure people. No doubt an indication of the date would be part of it. I do not wish to labour the point, but that is very important because, unless people feel that something


significant will happen, and unless something is done in good time, it will be a case of shutting the stable door after the horse has bolted.

Mr. Letwin: I wonder whether the hon. Gentleman believes that the confidence that he seeks to engender would be brought about if sub-postmasters believed that their future depended exclusively on subsidy.

Mr. Cotter: No, I do not, but we are saying that the Secretary of State should come forward with an announcement soon after the commencement of the Act because clarity would come from that. Other things would be coming forward, particularly the performance and innovation unit report; we are all waiting for that great thing to come from above. I hope that, when it does so, all sorts of other things will become apparent and reassure people, but we wait with bated breath to see what will come forward. I am bating my breath all the time, in fact.

Mr. Graham Brady: rose—

Mr. Cotter: I will bate my breath again and allow the hon. Gentleman to intervene.

Mr. Brady: What specific level of subsidy and what criteria for the application of that subsidy would the hon. Gentleman like to see in that announcement, which must be made within three months under his proposal?

Mr. Cotter: I am delighted that the hon. Gentleman has asked that question. It is precisely the question that I wish to ask the Secretary of State in a moment. We all await the answer with great hope.
I hope that, following my point about confidence, the Secretary of State will consider the matter very seriously. Sub-post offices are closing at the rate of about 500 per year, so we need something to stop that.
The Secretary of State could also acknowledge that—as has been said in so many debates—many sub-postmasters and mistresses are abandoning their sub-post offices because of their concerns about new technology. The matter of the pace at which new technology is introduced will have to be clarified. Many people with a certain age profile are very concerned about the introduction of new technology and feel that they should stop operating a sub-post office before they have to face up to that technology. As the Minister has said, high-tech training is needed. However, reassurances are also necessary.

Mr. Prior: Could the hon. Gentleman give us some idea of the size of subsidy that he and other Liberal Democrat Members would like to be provided to sub-post offices, given that their loss of income is predicted to be £400 million annually?

Mr. Cotter: That is a time-wasting question. Clearly, Liberal Democrat Members do not have information on the costs and nature of the problems. We cannot possibly answer that type of question. I am sure that Conservative Members could not answer that type of question. I could

ask the hon. Gentleman the same question. Later in the debate, I might ask a Conservative Member whether he or she would like to come up with such a figure. The question is ridiculous. We are not in government, and therefore have no idea of the financial problem in terms of pounds, shillings and pence.
I shall not speak much longer, so that the Secretary of State will have bags of time to deal with the issue. Our time for this debate has already been eaten into. I am sure that all hon. Members are looking forward to learning from the Secretary of State whether a lump sum will be paid, at a specific time, to sub-post offices, or whether sub-post offices will receive a minimum income guarantee. If there is such a guarantee, for how many years will it operate? Is the subsidy intended to be a long-term solution, or only a short-term means of plugging a hole?
Hon. Members have mentioned the Postal Services Commission, the regulator and the consumer council. We should like to know whether the commission will be able to make an input into the subsidy. It will certainly have a significant job in identifying the requirements. We are worried not only that we shall not be told the figures today, but that the Treasury will, as usual, be left holding the purse strings.
Although it is all very well for Conservative Members to make soundbites about subsidy and encouraging people to run post offices, those are only soundbites. Conservative Members are in an extremely weak position on the issue, because they are proposing privatisation. They are on the back foot on the issue.

Mr. Page: The hon. Gentleman has stunned me into making an intervention. May I delicately point out to him that, with the exception of a few hundred Crown post offices, sub-post offices are already privately owned, and that it is a little difficult to privatise something that is already privately owned?

Mr. Cotter: I am sure that the hon. Gentleman will recollect the proposals made, in 1994, by the previous Government, that the whole post office service should be divided into 11 regions—very much as the rail service has been divided, so that no division knows what the other divisions are doing. Sub-post offices could go just as branch lines went. I am sure that the hon. Gentleman will want to address the issue later, when he tries to convince us that there is no problem with the Conservative party.
Today, we have to have some answers from the Secretary of State. I very much look forward to hearing what he has to say to provide a little more clarity and confidence, and to provide our sub-postmasters with a little more security for the future.

Mr. Lilley: I agree with the hon. Member for Stroud (Mr. Drew) that new clause 1 is a major provision. The new clause changes the Bill's character and exposes the flaw in the Government's policy on sub-post offices. It should have been included in the original Bill. The need for it was foreseeable, and foreseen by many people, when the Government's policy on forcing people to have payments made through the banks was announced.
The failure to foresee that need and to make any precautionary moves was characteristic of this Secretary of State, whose head is always so deeply buried in the


sands of wishful thinking that he makes ostriches appear far seeing by comparison. We have a Secretary of State whose hallmark is not foreseeing the inevitable. He could not see that there was a possibility—for which he should have had contingency plans—that BMW might close Longbridge. Almost every car buyer in the country took that into account when they bought cars. I bought a Rover last October, and I was asked whether I had taken into account that Rovers might not be made in a year or two. I was patriotic enough to go ahead and buy one. However, I could foresee what might happen, even if the Secretary of State could not.
Likewise, everyone could foresee the need for subsidies if one took away the main revenue stream from post offices. I have told the House previously that, when I was Secretary of State, I was given advice that, if we were to make compulsory the payment of benefits through bank accounts, it would lead to the collapse of the post office network, and that the only way to prevent that collapse would be to introduce a subsidy for post offices. The only problem was that that subsidy would use up and absorb the bulk of the savings that one intended to make by introducing the policy.
Ministers have refused several times to confirm that they were given similar guidance, but I am sure that they were. Anyway, they have now tacitly admitted—by introducing the clause—the first two elements of that syllogism; that their steps to remove the DSS contract from post offices will put at risk the post office network, and that the only way to ensure that the network does not collapse is to introduce subsidies. Hence the power that the Government propose to take in the clause.
The tragedy is that the Government have not seen through the absurdity of their policy; namely that it will not save the money that they think it will. They should rethink their policy, start again from stage 1, and ensure the viability of the post office network by paying it to provide a service, rather than subsidising it to do other things than those that the Government require.

Mr. Letwin: Does my right hon. Friend agree that we anticipate, in the near future, some Secretary of State—possibly the present one—coming before the House to tell us about the subsidies that will need to be paid also to the banks?

Mr. Lilley: That is a good point to which I shall come in due course. The clause makes provision for such subsidies; rightly so, given the path upon which the Government have embarked.
The Opposition can at the very most give the clause a very reluctant and conditional welcome. We do not believe that the post office network ought to survive and exist on subsidy. We do not believe that it is necessary to embark upon a path that will make that essential. We agree with the National Federation of Sub-Postmasters, whose members do not want to live off subsidies—certainly not permanent ones, and preferably not even temporary ones—and want to restore a system where they are paid by the Government to deliver a service to the Government and to those whom the Government need to provide with benefits near the places where they live.

Mr. Gale: I wanted to intervene after my right hon. Friend's first sentence, but I thought that it would be

discourteous so to do. I share his view that this clause is anathema in its content simply because we do not believe in subsidies. However, we are engaged in damage control, and it is not my job to make the case for the Liberal Democrats that they so signally failed to make for themselves. The new clause says not "shall" but "may", and states:
The power to make a scheme … shall not be exercised without the consent of the Treasury.
First, the Secretary of State does not have to act. Secondly, the Treasury could say no. How does that help sub-post offices?

Mr. Lilley: My hon. Friend makes a powerful point that leads me to ask how the Government got into this mess. As I have mentioned before, I have come across this issue in previous incarnations as Secretary of State for Trade and Industry and as Secretary of State for Social Security. In this context, my experience as former Treasury Minister is even more valuable. As a Treasury Minister, I wanted to see savings made, but I learned in seven years at the Treasury—four as parliamentary private secretary to the Chancellor and three as a Treasury Minister—that the Treasury has a structural weakness. It is inherently prone to seek savings in one Department even though that may result in costs in another that more than offset the savings.
That approach is even adopted consciously and willingly and has been enshrined in a doctrine by a distinguished Treasury mandarin, Nick Monk. He said that the doctrine should be, "Take any savings from any source when possible." The Treasury does so, because even if there are offsetting costs in another Department, it hopes to be able to cap that spending or force that Department to find other savings to offset the extra costs in turn. That is a weakness of Treasury spending controls and I have always thought so. I thought so when I was a Treasury Minister and when I was Secretary of State for Social Security, which is why I resisted the proposals before us. The result of the policy of trying to make savings by eliminating the £400 million contract for the DSS to pay Post Office Counters Ltd. to deliver benefits through post offices would inevitably be a rise in the costs of the DTI as it introduced subsidies to uphold the post office network throughout the country.
The Treasury was able to proceed with that policy—and it has always eyed the possibility of a saving of £400 million and tried it out on previous Secretaries of State, including the predecessors of the present incumbents at both Departments—only because it had installed two fresh-faced, wet-behind-the-ears former Chief Secretaries to the Treasury as the Secretaries of State in the relevant Departments. It was a necessary precondition that the DSS and the DTI be in the hands of former Chief Secretaries who had not yet learned how their Departments interacted and how the consequence of savings in one would be increased costs in the other.
As soon as a problem emerged with the Horizon project, the Treasury seized the opportunity and told its old boys to go into action to clobber the contract with Post Office Counters Ltd. and impose payment of benefits through banks, as it had often wanted to do before. The problem with that policy is that it removes from the post office network a third of the income of sub-post offices.


The underlying problem that the Government have is that, if they remove that income, they will render many sub-post offices—probably a third of the network—non-viable. Indeed, many sub-post offices receive more than half of their income from the DSS contract.
There are only two solutions to the problem. One is to provide alternative sources of revenue for the sub-post offices and the other is to provide a subsidy. Today, the Government are taking the first step towards subsidies. However, Ministers will have been given permission to introduce new clause 1 only with extreme reluctance on the part of the Treasury. It had hoped to get away without a subsidy clause and that is why it was not in the original Bill. The Secretary of State was forbidden from including a subsidy clause at that stage—if he even asked to do so—and it was only when uproar began to grow in the sub-post offices that he had to announce on Second Reading that he was considering introducing such a clause. He did not dare announce it before the two debates last week, for fear that those protesting would have realised that the new clause was permissive rather than prescriptive because it uses the word "may" rather than the word "shall".

Mr. Letwin: Is not another reason why the Secretary of State might not have wanted to present the new clause to the 2,000 sub-postmasters is that they want not subsidies but a viable future?

Mr. Lilley: My hon. Friend is right. That is central to the Opposition's case about the fallacy of what the Government are doing.
Initially, the Secretary of State would have met stalwart resistance from the Treasury, as I am sure he would confirm. The Treasury would have opposed the introduction of any power enabling the right hon. Gentleman to subsidise the post office network. It is almost certain that the right hon. Gentleman would have had to enter into an agreement with the Treasury that the proposal was being introduced only for cosmetic reasons, to placate the sub-postmasters, sub-postmistresses, pensioners, young mothers and disabled people who were frightened that the post office network would collapse without subsidy.
The Secretary of State is sniggering in a complacent and self-satisfied manner. I hope that the Government's freedom of information legislation will mean that we will be able to learn the terms of the agreement with the Treasury that has enabled him to introduce the new clause.
The right hon. Gentleman may be sniggering now because he thinks that the Freedom of Information Bill is also a cosmetic exercise and that he will not have to reveal the terms of that agreement. However, I rather think that he will. Advice to Ministers may be precluded from the Freedom of Information Bill, but agreements between Ministers are not. If he were candid, he could tell the House today the nature of his agreement with the Treasury—or at least whether such an agreement exists, even if it remains secret.

Mr. Letwin: If my right hon. Friend pursues this line of inquiry, is he not worried that the Secretary of State

will bring forward further measures in another place to amend this Bill to prevent the Freedom of Information Bill applying to it?

Mr. Lilley: I would not put it past the Secretary of State to wish to do that, but I am confident that he would find the option outside the terms of the long title of the Bill. However, the Freedom of Information Bill has not completed its passage through the House and the Government may try and amend that instead.

Mr. Bercow: The clause is imprecise and does not specify the sums that would be available, or the circumstances in which they would be allocated. Does my right hon. Friend agree that that means that the Secretary of State has no defence on grounds of commercial confidentiality?

Mr. Lilley: I am certain that that is the case. It is alarming for Parliament to agree a clause such as new clause 1. It is open ended and not specific, yet it gives the Secretary of State enormous powers. The Secretary of State can delegate those powers to other people, of unknown provenance, and they enable money to be allocated in ways that we have no guarantee would be fair, equitable or above board.
I suspect that the Secretary of State has got away with all that because he has promised not to use the provision. Therefore, the House faces a dilemma. We do not want the clause to be exercised or subsidies used to support the post office network. The network should be paid for providing a service, not subsidised in lieu of that. However, the Government took the first false step and we need a mechanism for subsidising the network until a Conservative Government can get back in office and restore it in a more sensible and fundamental way.

Mr. Prior: If we were looking at a one-off, measurable change that reflected a change in technology, I could understand the argument for a subsidy of a given amount and for a given amount of time. However, as I understand it, we are looking at a permanent diminution of income, amounting to perhaps 50 per cent. of the revenue of a sub-post office. How can that possibly be rectified by anything in new clause 1?

Mr. Lilley: My hon. Friend is absolutely right. The Government have created a black hole and are now creating a rather circumscribed mechanism—conditional and tentative—for filling it up. As I shall show in due course, even if they filled up every cubic inch of that black hole, they would still leave the network in difficulties. If they replaced every penny of revenues that the post offices and sub-post offices currently receive from the Department of Social Security contract with a subsidy, the sub-post offices would still lack the necessary footfall—that is, the trade generated by pensioners, young mothers, disabled people and others who collect their benefit and spend a little of it in the sub-post offices, which thereby generates additional income over and above the fees paid by the DSS for the task of distributing its benefits.
The value of that trade must be significant. I believe that my hon. Friend the Member for West Dorset (Mr. Letwin) will be discussing that issue. If so, I shall leave it to him.

Mr. Letwin: indicated assent.

Mr. Lilley: As we do not want to hold up the House unnecessarily by repetition, I shall leave that interesting issue to my hon. Friend.
My hon. Friend the Member for North Norfolk (Mr. Prior) questioned whether it is a permanent black hole. The alternative to subsidy is other sources of revenue. If the post offices can generate alternative revenues to replace the DSS fee, they might be able to restore viability. The question is whether they can do that. Is it realistic to suppose that they will be able to generate enough revenues to replace a third of their income by 2003–05, when this calamity will hit them? I think that that is manifestly impossible, as doing so would require a rate of growth in other revenues that would be extraordinary and unprecedented, and the Government have given no indication of where it would come from.
The Government have indicated that they are going ahead with the truncated Horizon project, implying that that has the potential to generate massive revenues. When we originally introduced the Pathway-Horizon project to automate the delivery of benefits, we saw one of the virtues of computerising all the sub-post offices as enabling them to build on that computer link to deliver other services. However, we never imagined that that was more than a by-product. The Government have cut away the core, central purpose of the project—the delivery of benefits—and left the by-product on a stand-alone basis.
It is a very costly project—the Secretary of State's estimate is £800 million to £900 million; so not until it has generated £800 million or £900 million worth of revenues will it be able to contribute a penny to filling the black hole created by the absence of the DSS contract. When will that be? When will that project have repaid £800 million and started filling the black hole that is created by the removal of the DSS fee?
I asked the Minister for Competitiveness that question in last Wednesday's debate in Westminster Hall, but he did not answer it. Apparently, it is the tradition in Westminster Hall not to answer questions from other people. It is not supposed to be a controversial, adversarial place in which people ask difficult questions, and I was out of order in doing so. Perhaps he will answer the question today. When will that project generate a penny of extra revenues? Of course, the Government say, "We are subsidising part of the contract and £500 million will come from Treasury machinations and will not be expected to come from the Post Office." It will still have to come from the taxpayer, so it is an alternative form of subsidy. Only £400 million will have to be paid off by sub-post offices to pay for the contract. It is a funny business to enter into a scheme that is designed to save money and then conceal the fact that it will cost money by subsidising half of the scheme.
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In any event, the Horizon project so far is primarily an internal accounting and management tool for sub-post offices. The existing functionality is designed—doubtless

it is useful—to improve the management of sub-post offices and to bring some centralised accounting and other functions to them. As yet, the functionality does not exist. It has not been written and it is not in place to engage in commercial business, particularly banking business, in which the Prime Minister and the Secretary of State have asked us to put much faith.

Mr. Drew: I think that the right hon. Gentleman is talking historically. I have talked to Post Office Counters Ltd., and I understand that it has a pilot project up and running, which means that it can do business with the banks. The issue now is negotiating rates, which is to be expected, but it is important to get it on the record that the scheme is feasible.

Mr. Lilley: Indeed, mechanisms and relationships exist between the existing sub-post office network and the banks, but that is not through the Horizon project. The Government will go out to tender later this year to seek companies that are willing to write the software and to produce a package that will enable post offices to receive and transmit money automatically from the banks, and carry out the banking function of Lloyds, National Westminster, Barclays and HSBC. They will act as a local link, and basically fulfil the Secretary of State's pledge that everybody having by compulsion had his or her money paid into a bank account, can have it transmitted to the local post office, from which he or she can draw it out. That system is not yet up and running. Indeed, it is not even out to tender.
I visited a post office in the constituency of the hon. Member for Stroud before he temporarily became its Member of Parliament. The early stage Horizon project is operating there, and 300 other post offices a week are coming online. It is essentially performing an internal management function. For the record, it does so using a smart card rather than a swipe card. The original project was designed for smart cards rather than swipe cards, but that is an aside.
It is unlikely that Horizon will enable extra revenues to be generated in the time scale that is being forced upon it by the Government through the abolition during 2003–05 of the Post Office contract. Subsidy is inevitable if the Government are to protect and preserve a national network of sub-post offices. However, will the subsidy necessarily go to post offices? The new clause allows the Secretary of State to make by order a scheme
for the making of payments for the purpose of assisting in the provision of public post offices … or assisting in the provision of services to be provided from public post offices.
That would enable the Government to subsidise the provision of banking services from sub-post offices, which would effectively subsidise the banks.
The Government propose to transfer the cost of distributing benefits from sub-post offices to banks. They have provided some misleading figures suggesting that it costs, on average, 49p per transaction to deliver a payment by the order book system through sub-post offices, but allegedly only 1p through the banks automated clearing system. The automated clearing system will charge the Government 1p for transmitting money from the Benefits Agency to a local bank. However, that is not the same as the cost of withdrawing money from a bank account or running a bank account. As I mentioned last week, the


Government—at least, another Department of this unjoined-up Government—have helpfully issued a report on the competitiveness of the banking sector. Members who have read as far as page 283 will have found appendix D4—

Mr. Bercow: Hear, hear.

Mr. Lilley: My hon. Friend, like all my hon. Friends, has of course done so—[Interruption.] He has committed it to memory, as we may all be sure. Anyone who has read that far will know that the average cost of withdrawing money by cheque is £1.09 and that the average cost of drawing money from a hole-in-the-wall machine is more than 30p. The Government expect the banks to absorb the costs that will be incurred when people draw their benefits from the banks.
Banks, of course, will not bear the cost. Customers of banks always bear the costs of banks, and they, including benefit claimants, will do so. The Treasury proposes to transfer the costs from the taxpayer, who meets the costs of using the sub-post office system, to the customers of banks, who will meet the costs of using the banking system. Banks are not philanthropic organisations. They do not exist to deal with the problems of the general public, or even the problems of the Government—unless they are compelled to do so. Even if they are so compelled, they will be reluctant to take on people who represent an unremunerated cost.
If banks are unable to levy any charge on those who withdraw money from hole-in-the-wall machines or by cheque, they will be reluctant to accept as customers pensioners, disabled people and others who depend on benefit. The Government will be able to persuade the banks willingly to take on those people only if they are prepared to subsidise the banking system. When the Minister for Competitiveness winds up—[Interruption.) Apparently the Secretary of State will wind up: the big guns are before us, or at least the temporary pop guns.
In his wind-up, will the Secretary of State confirm that the new clause will permit subsidies that will effectively subsidise the banking system so that it may transmit money through sub-post offices? Only by that mechanism will the Government persuade the banks to take on such customers, let alone enable those customers subsequently to withdraw money from sub-post offices.

Mr. Letwin: May I press my right hon. Friend a little further on his ingenious exegesis of new clause 1(1)? Is he suggesting that it would give powers to the Secretary of State to make payments to the sub-post offices in order that they should make payments to the banks for the service of providing cash tills, or that the same route should be followed for the purpose of paying the banks for providing the connection so that sub-post offices may deliver money across the counter? Finally, is he suggesting that they might be able to make payments to the banks to subsidise them for taking on customers whom they do not want?

Mr. Lilley: My reading of subsection (1)(b) is that the Secretary of State is taking powers that will enable him to subsidise the provision of services provided from

public post offices, but that he need not pay the subsidy direct to the post offices. He could subsidise the banks for providing that onward transmission to the sub-post offices. The new clause is phrased in a way that would allow him to do that, and it may be necessary for him to do so if the scheme is to be viable and he is not to end up with bankrupt post offices, with pensioners and others being refused bank accounts.
A whole array of questions remain unanswered about how the Government propose to deal with the problems of people who do not have, do not want or are not legally permitted to have bank accounts. That is a separate issue, and I appreciate that you, Mr. Deputy Speaker, would urge me to return to it on another day if I attempted to deal with it at length. I shall not try your patience. I have demonstrated that the Government have taken a route that may necessitate subsidising banks as well as directly subsidising sub-post offices.
What is the alternative to the mess that the Government are in? We could provide post offices with an income, not a subsidy. The Department of Social Security has always felt—rightly—that if the sub-post office did not exist, we would have to create it. The DSS, unlike banks, deals with people who are often immobile, who may not own cars and who cannot easily travel long distances to pick up their money. Those people want to be able to collect their money from a reasonably close outlet—namely, the sub-post office. Banks, by contrast, want people to be rich, have cars and be mobile. Banks expect people to go to a bank in town or use the internet or some other means. Hence, banks are closing branches.
Bank branches have always been fewer in number than the branch network of the Post Office. The sub-post office has been unique in dealing with the most vulnerable, immobile and often disabled people who need us to get money to them. That does not mean that we should not seek the most efficient and cost-effective ways of getting money to people. We must pay the sub-post office network to exist as an outlet in most of the parishes of this country, but if we can cut unnecessary costs in getting the money to the sub-post offices, we can make significant savings for the taxpayer.
As I recall, half the cost of the annual £400 million contract between the Benefits Agency and Post Office Counters Ltd. went on the latter's costs for warehousing, storing, printing and distributing order books, which are the most inefficient and insecure means of distributing money known to man. That is why we began a project to automate that element of delivery, so that money could go electronically to the post offices and be delivered to benefit recipients who would hold a benefit payment card. That would have cut out £140 million of fraud a year, which would have gone a long way to paying for the change.
That is a big task, but not unprecedentedly so. A similar project was successfully introduced in Ireland, which, for historic reasons, has a network of sub-post offices and a benefits system rather like ours. The people who introduced the system in Ireland were in fact contracted as part of the consortium to introduce it in the UK. Parts of the scheme are complicated, such as the so-called CAPS programme—the customer automatic payment system—that the Benefits Agency has been developing in-house. Although that was the most complicated part of the scheme, I am told that it is not what has gone wrong with it. Commercial add-ons are being retained.
Problems allegedly arose at some stage of the contract. It would be astonishing if that were not so. No major computer project anywhere in the world has not had problems of some sort. However, problems must be managed. It is the responsibility of Departments and, ultimately, of Ministers to sort them out: to simplify the system, if need be; to remove unnecessary complexities; and to deal with the apparent management quagmire that—rather than any technically insurmountable difficulties—lay at the heart of the matter. Ministers did not do that; indeed, they denied that there were any problems serious enough to delay the completion of the project by 2001. They told the House repeatedly that the project would be finished on time.
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The then Secretary of State for Trade and Industry, now the Secretary of State for Northern Ireland—doubtless he was sent to Ireland to find out how things really work—told the Select Committee that he was confident that the project would be satisfactorily completed. The Government were subsequently condemned by the Select Committee for being less than candid—a pretty damning criticism. Their defence was that it was commercially difficult for them to tell the truth. That might be described as the BMW defence, which, paradoxically, the present Secretary of State for Trade and Industry uses to excuse his predecessors for not having told the House the truth.
It would be interesting to hear from you, Mr. Deputy Speaker, or from Madam Speaker, whether it is acceptable for Ministers to say that, in future, they will deceive the House if they believe that it would be commercially inconvenient not to do so. Will we be able to accuse Ministers of misleading the House, of telling lies, or of being less than candid for commercial reasons? After all, that is what they said they did and it is what the Select Committee accused them of doing.
Ministers should have sorted out the problems that arose, rather than pretending that they did not exist. They could have introduced a newer project to deal with the problems of automation so that the money got through to the sub-post offices and savings were made during the interim process, thus ensuring that we had a network of sub-post offices that were paid an income for performing a valuable social service—the provision of benefits in their communities to those people who cannot be expected to travel long distances to collect them.

Mr. Bercow: As the debate progresses, it seems increasingly clear that the new clause represents a bale-out for the Secretary of State, rather than support for the post office network. Given that point, does my right hon. Friend agree that it would be helpful to know the exact nature and scope of the Treasury's day-to-day involvement with the proposed subsidy scheme, and in what circumstances it would be open to the Treasury to stop or restrict the application of the scheme?

Mr. Lilley: That would indeed be helpful. Of course, the new clause includes the bare-faced assertion that the Treasury has the right to prevent its implementation—there are no caveats in that provision. It would be interesting to know the modus operandi that was agreed between the Secretary of State and the Treasury.
I am grateful to the hon. Member for Stroud for endorsing the idea of a benefits payment card—a smart card to ensure the payment of benefits through a post

office. I am glad that he supports the Opposition on that. I hope that he persuades Ministers to go back to that scheme.
Will the subsidy be worth while? We should subsidise sub-post offices only if the money is available and if the cost of the subsidy does not exceed the savings that were expected under the policy that made its introduction necessary in the first place. It is unlikely that the net savings—after giving the post office network enough subsidy to maintain it—will be significant; they could even disappear entirely.
Is the money available to make such subsidies? From the Prime Minister's response the other day, we got the impression that there is as much money as necessary to bale out the Government from the problems that they have created through their policy. In Westminster Hall last Wednesday, I asked the Minister whether those who were required to have their payments made through banks after 2003—pensioners and everybody else—would be subject to the same terms as those who currently volunteer to have such payments made through a bank. The payments are made monthly, four weeks in arrears.
The Minister looked distinctly fraught when I asked that question and he did not answer it. He was well aware that if millions of pensioners had to wait for four weeks to receive their pensions, instead of collecting it weekly, the poorer pensioners would experience a large gap in their cash flow. That is why the bulk of low-income pensioners, who depend primarily on the state pension, do not opt for payment through the bank, but collect their money weekly from a sub-post office.

Mr. Desmond Swayne: My constituents have pointed out that the forms are not clear. Because of their design, many elderly people do not realise that they have a choice—they think that once they have opted for the ACT system, there is no way back.

Mr. Lilley: When that point was put to the Minister of State, Department of Social Security, he said, in effect, that no one would be stupid enough voluntarily to opt for monthly payment by ACT through a bank, four weeks in advance, if they primarily depended on the basic pension. Some people may have been misled, as my hon. Friend suggested, but the Minister thinks that they are stupid if they take that course.
The Minister for Competitiveness did not answer my question last week; he obviously realised—as I could see from his expression—what a huge problem there would be if we suddenly required all pensioners to receive their payments monthly and up to a month late. There would be a gap of about four weeks when they would be without income.
When my right hon. Friend the Leader of the Opposition raised the issue of post offices at Prime Minister's questions last week, the Prime Minister, who had clearly been alerted to the problem during the two hours between the Westminster Hall debate and Question Time, gratuitously blurted out that he wanted to make it clear that pensioners would be entitled to receive their benefits not just in cash from the post office, but weekly rather than monthly. A bit of policy had been made on the hoof; the Prime Minister committed the Government to making pensions payments weekly, rather than four-weekly in arrears. In future, people can receive those payments through the post office.
I tabled a written question about what would happen if such weekly payments were extended to all the pensioners who currently have their pensions paid monthly, three or four weeks in arrears. The answer was that, by advancing everybody's payments by three weeks, there would a cashflow effect on the Treasury of £550 million. The Prime Minister has made a commitment that could cost the taxpayer up to £550 million in the year of its introduction—it would be a one-off cost, resulting from advancing the payments of those who, because they do not need continuity of payment, currently delay their payments and have them made monthly through a bank.
The actual amount would depend on how many people exercise that right; however, as it is an attractive one, we might assume that many people would choose it and that it would cost the Treasury a large amount. One has to wonder whether the Prime Minister had discussed that matter with the Secretary of State for Social Security during those two hours. Was he aware of the cost? When I tabled the question to the Department of Social Security, officials from the Department telephoned me to clarify the issue, so I had to explain to them how the system worked. They then confirmed in their answer that it would indeed cost £550 million. My estimate had been £600 million, but it was pretty close to the mark.
The Prime Minister, endeavouring to avoid a difficult headline, has committed the Treasury to paying up to £550 million in a one-off payment to get the Government out of a hole that they have created by a policy intended to save a couple of hundred million pounds a year at most. We have already heard how the Government have committed themselves to writing off £500 million of Post Office obligations to meet half the cost of the Horizon project. Therefore, a policy designed, notionally, to save money is already costing upwards of £1 billion before it has saved a penny, and before payment of any of the subsidies introduced by today's measure.
The policy is a disaster—a disaster that was waiting to happen. It has happened because two newly arrived former Treasury Ministers did the Treasury's bidding without working out what the implications were for their Departments—the Department of Social Security and the Department of Trade and Industry. Now, the only way that the Government can bail themselves out is to introduce an open-ended subsidy by means of the new clause.
We need some answers from Ministers today. Is that subsidy intended to be permanent or temporary? Will it be discretionary or automatic if, as a result of post offices closures, the access criteria are not fulfilled? Will the subsidy be to banks or just to post offices? Will it be a large subsidy—and, if so, how large—or small and insignificant? Above all, will it be sufficient to keep the post office network alive and vibrant, or will it be insufficient to do more than to slow its inevitable collapse, which the Government set in train when they announced that people would have to have their benefits paid, in the first instance, direct into bank accounts?
I hope that the Government will think again about the need for the new clause.

Mr. Mike Wood: I may not speak as briefly as did the right hon. Member for Hitchin and

Harpenden (Mr. Lilley), but I shall speak in support of the new clause, because I accept that the automated credit transfer proposals will place under threat the core work of many sub-post offices. It seems to me that the Government are right to proceed with their plans, as, to coin a phrase, doing nothing is not an option. If the experience of the previous Government does not show that, nothing does.
The Conservatives said that they would not vote against the new clause but then spoke for a considerable time, and with considerable force, about its failings. They seem to forget that in 18 years, while Conservative Governments did nothing, thousands of sub-post offices went out of business. Therefore, doing nothing is not an option, and in the face of that history—in the face of the continuing closures of sub-post offices—it would not be sensible for the Government to retreat from this plan. Extra uncertainty will help nobody—certainly not sub-post offices in my area.
The Horizon project—to be completed by next spring, in spite of what the right hon. Member for Hitchin and Harpenden said—will open up new areas of business potential for sub-post offices. Of course there is a cost, but no one could argue that it will not open up that potential.
We look to the tripartite working party set up by the Government with the National Federation of Sub-Postmasters and the Post Office to find new work for sub-post offices—not just to re-arrange what is already there, or to make available to sub-post offices the work that is currently available only to Crown post offices. The potential of the network is woefully under-used. Surely, with the will of all the parties, extra work can be found.
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If we are to talk about subsidy for the community benefits of post offices and the community contribution that they make, the subsidy will need to be considerable. In my area, at least, many sub-postmasters and sub-postmistresses spend much of their time on the wrong side of the counter, as it were, helping pensioners with problems not directly related to their business, reading things for them because their eyesight is not terribly good, and taking people on one side when they have problems. If we suggest that there should be a subsidy to compensate for that dimension of the work, the subsidy will undoubtedly be considerable.
I stress to Ministers the scale of the threat that ACT can pose to sub-post offices, not only in rural areas and inner cities, but in areas such as my constituency, which is neither rural nor in an inner city. At least two of the 25 post offices there depend on the payment of benefits over the counter for more than 75 per cent. of their work. As always, averages hide the full extent of the story, but almost all the business of some post offices—not only rural or inner city ones—comes from the payment of benefits over the counter.
Therefore I hope that in his final remarks, the Secretary of State will give two assurances to postmasters and postmistresses such as those that I have mentioned, not only in my constituency but throughout the country, whose business depends on the payment of benefits.
First, I hope that my right hon. Friend will give an assurance that any subsidy offered by the Government to cover the transitional period as ACT is bedded in will not


be restricted to rural offices or to those in inner cities, but will apply throughout the country, and that offices will be treated on a case-by-case basis. Secondly, I hope that he will assure us that if all the efforts of all concerned, not just in the tripartite group but throughout the industry, to find alternative sources of income have not been successful by any objective criteria by, let us say, the end of 2001, consideration will be given to postponing the introduction of ACT until enough progress has been made to ensure that the changes, inevitable though they are, will not be introduced until we are sure that they will strengthen the post office network.
If the Secretary of State gave those two assurances at this stage, there would be a collective sigh of relief throughout the network, and there would be much greater willingness to work with the Government to revitalise the sub-post office network, which has for so long been lamentably ignored and left out of proper consideration. If he does so, we shall be well placed to push the changes through.

Mr. Baldry: I am pleased to be able to contribute to this debate, as I was one of just four Conservative Members who sat on the Standing Committee considering the Bill.
First, may I say how sorry I am that my hon. Friend the Member for Rutland and Melton (Mr. Duncan) is not here today. He led for the Opposition in Committee and did an excellent job, being vigorous in cross-examining Ministers on the Bill's shortcomings. It is a cause for great sadness that he is today in hospital with, I understand, a ruptured appendix. Indeed, he appears literally to have bust a gut in his opposition to this measure.
The debate may well take a little time, not least because there is absolutely no reason why the new clause should not have come before the Standing Committee. The Secretary of State today seems to have introduced an interesting new constitutional convention: if Ministers are particularly interested in a new clause they do not have it discussed by the Standing Committee, but reserve it for Report and Third Reading. That undermines the whole purpose of Standing Committees, which is to scrutinise, rationally and deliberatively, measures brought forward by the Government, doing so line by line and clause by clause.
On the face of it, the Secretary of State is today telling the House "We always intended to bring forward this clause. We deliberately did not put it before the Standing Committee, because we thought it should be scrutinised by the House as a whole." The House as a whole will not have known that, but I question whether that is the truth and accords with the facts.
As one of those who sat on the Standing Committee, I know that much of the Committee's time was taken up with the concern about maintaining the integrity of the post office network in general and sub-post offices in particular. I suspect that during that time we visited practically every post office in my constituency, and the post offices in the constituencies of other hon. Members. I understand that the Minister himself was dispatched by his private office to visit rural post offices in north Wales.
At no time during the Committee's deliberations did the Minister tell us "Don't worry chaps. There is no problem. We shall sort it out, and come Report and Third Reading we have a wizard wheeze: we shall come up with

a new clause which will provide for a subsidy, so you can curtail these discussions." I for one would have been very grateful for that, because as well as being one of only four Conservative Members on the Committee, I was one of only three Conservative Members on the Trade and Industry Select Committee. The records of the House will show that on many days I was in both places at the same time, often on the Select Committee having to cross-examine the Secretary of State and others about their total incompetence in handling the Rover fiasco. So I would have been very grateful if we could have short-circuited proceedings in the Standing Committee.
If the Minister for Competitiveness—for that is his title—could have told us "Much of this discussion can be curtailed, because we shall bring forward a new clause on Report", I suspect that many of us would have said that we would look at it, and the Standing Committee procedures could have been much shorter, but we never had a scintilla of a hint of that.
Moreover, the Minister for Competitiveness—because he clearly recognised that he was under considerable pressure from colleagues on his own side of the House, like the hon. Member for Batley and Spen (Mr. Wood), who urged him to consider delaying the introduction of automated credit transfer—decided to send out a "Dear Colleague" letter. We all know "Dear Colleague" letters; they are letters that Ministers send to every hon. Member, so that they cannot be accused of being partial, but they are really meant to give succour to their own Back Benchers and be sent to constituents who are raising problems. We had one today on pensions. It included charts, and I was surprised that it even included a video programme, on what the Government were supposedly doing for pensioners.
We had a "Dear Colleague" letter on the Post Office network. There was not a scintilla of a shadow of a suggestion of a subsidy in the letter and not even a hint that the Government might table a new clause on Report. Indeed, the Minister said:
The Government has put its money where its mouth is.
That is not a term I would use as a Minister, but this is new Labour, new jargon. There was not a whisper or a hint of a subsidy.
That must cause the House to consider the vigour with which the Government are advancing the new clause today. Having heard the Secretary of State, one must have more than a suspicion that what really happened was this. Ministers hoped that they could brazen it all out, that by the time the Bill went through Committee the sub-postmasters and sub-postmistresses would have been bought off, and that the Minister for Competitiveness could visit sufficient sub-post offices throughout the country and reassure them that there was no problem. But, of course, the Government could not do that, because the sub-postmasters and sub-postmistresses knew that there was a problem, and they would not let up. What is more, customers of sub-post offices around the country were determined that their voice would be heard.
In every village in my constituency, and I am sure in all the constituencies of my right hon. and hon. Friends, people signed petitions. The petition of 3 million that was delivered to Downing street last week was but the tip of an iceberg, only part of all the petitions that had been signed. Many were produced through local newspapers


and regional newspapers, such as the Western Morning News I suspect that huge numbers of people signed petitions.
I am sure that if we could see the minutes of Cabinet meetings held a couple of weeks ago, we would find that the Secretary of State for Trade and Industry presented a paper to his Cabinet colleagues explaining that they were in some difficulty, that they were coming up to Report and Third Reading and that there was about to be a substantial lobby of Parliament by sub-postmasters and sub-postmistresses. What was more, local elections were coming up. In the local elections on 4 May the Labour party will defend many district council seats in rural areas and other parts of the country. I am sure that the Secretary of State is conscious that it is not particularly popular at present.
So the Secretary of State prevailed upon his Cabinet colleagues to allow him to table a new clause. I have no doubt that minutes went between the Department of Trade and Industry and the Treasury, with the Treasury saying "Of course, you can do that, provided it makes no commitment whatsoever and makes it absolutely clear that no subsidy will be introduced without express Treasury permission."
When one looks at what the Secretary of State said last week in response to the lobby by sub-postmasters and sub-postmistresses, one sees that his line to begin with was very robust:
Next week we will table a new clause to the Postal Services Bill when it is debated on Report. It will enable me to set up a financial scheme to ensure that essential services can still be delivered through a nationwide network of local post offices. Our key target is a viable future for the network. We want to ensure that the Bill covers all possibilities.
I pause there. Clearly there seems to be a recognition of the fact that what the Government are doing in the Bill may well mean that unless they take some action there will not be a nationwide network of local post offices.
The Secretary of State then said "It may"—that is the crucial word—
well be that in future, because of changes that are being introduced. financial assistance should be offered to the network.—[Official Report, 12 April 2000; Vol. 348, c. 385.]
There is no guarantee from this clause that anything at all will happen as a consequence. There is no guarantee that the Treasury will put its hands in its pockets to the extent of one penny as a consequence of this new clause. It may well be that all that we are seeing in this debate is an almighty con of sub-postmasters and sub-postmistresses, who may think that as a consequence of the new clause there will be a rescue—some help—offered to them, but who in reality will discover that none whatsoever is forthcoming.
We support the National Federation of Sub-Postmasters in its desire for income, not subsidies, for sub-post offices. The clause is needed only because the Government are proceeding with their disastrous policy of switching to ACT, which threatens the survival of thousands of sub-post offices across Britain. Of course, the NFSP is not unaware of the fact that the new clause offers sub-postmasters no guarantee in the future. At the very best, it may offer them only an unspecified subsidy.
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Colin Baker, the federation's general secretary, yesterday said:
sub-postmasters want to have a commercial living in viable and vibrant post offices. The prospect of existing on a subsidy therefore will not be a very pleasant one for them … We would say the answer to the network is investment, not subsidy allowing us time to get through this difficult period and out the other end. As they say, give a man a fish and he will eat for a day, give him a fishing rod and teach him to fish and he will eat for a lifetime.
Several colleagues have made the point that sub-postmasters want some certainty. My hon. Friend the Member for North Norfolk (Mr. Prior) made the pertinent point that sub-post offices are private businesses and that those who run them need to have an idea of what lies ahead. The Government's new clause gives them absolutely no idea of what will happen in the future, and the Secretary of State has provided no figures on the extent of the subsidy or the conditions under which it might be introduced. To whom will the subsidy be paid, how will it be paid and in what circumstances will it be paid? Will it be paid to all post offices, will it be paid on the basis of transactions or will it be paid to some post offices when they fall below a certain threshold? There has not been a scintilla of substance in anything that the Secretary of State has said on any of those matters.
Neither has the Secretary of State provided any vision of how he sees the post office network developing. That is a pity. If he had simply read The Guardian the other day, he would have seen sound advice in an editorial. It observed:
Rural post offices must be kept open. They are the arteries of country living and of the rural economy. It is very sad that the government has only been forced into devising a strategy for survival because it failed to see the obvious consequences of its decision to pay benefits directly into bank accounts instead of over PO counters by 2003. Many sub-post offices rely on money from this source for 40 per cent. of their incomes. But at least the government is at last thinking about a long-term solution, under pressure from public opinion, including this week's 3,000 strong demonstration of sub-postmasters in London and the outcry against Barclays' decision to close outlying branches. This problem will not be solved by leaving it to market forces. Companies and banks will not rush in to fill the rural gap because the profits are simply not there. Nor can a single post office do much because it is only one spoke in a solution that must involve the underlying strength of post offices: the fact that they are a network and there are 19,000 of them. The seeds of survival are waiting to be planted.
The Secretary of State has given no clues about the long-term survival prospects of post offices. He has merely said that if certain unspecified conditions arise, he may introduce an unspecified and unknown subsidy to help some unspecified and unknown post offices in the future. We did not hear in Committee and have not heard in this debate any suggestion of how the Government might turn around their mindset and stop thinking of sub-post offices as part of an old economy. In fact, they can be part of the infrastructure of a new economy.
We are moving increasingly into the age of the internet and of online shopping and communication. When that happens, goods will still have to be delivered. Vibrant post offices are ideal collection points and new technology can do much to assist the rural post office network. One hopes that the Government will turn their mind to thinking positively about how we can enhance the post office network rather than closing it.
We must not forget just how essential sub-post offices are to the life of England as a whole. I suspect that my constituency is not unusual, because practically every


parish council in it has written to me expressing concerns about the Government's proposals. I shall share with the House the thoughts of some parish councils on their concerns about the threat to the rural post office network.
Bodicote parish council says:
We believe that the loss of this business is likely to have a deleterious effect on smaller Post Offices, particularly in local areas and may well threaten their livelihood. We believe that closure of these smaller Post Offices would in turn have a retrograde effect on local communities … Our Post Office currently stocks a range of basic items; this is the only place in our village where such things can be bought—the alternative is to travel to the supermarket in the next town.
We believe our local Post Office plays a vital role in the local community, not least as the only focal point in our village apart from public houses. We wish to urge the Government to make a commitment to maintain the existing network.
Middleton Stoney parish council says that it is concerned
at the potentially adverse effect on rural post offices of the proposed changeover to payment of benefits by ACT. Many rural post offices depend on the revenue from such payments and there can be little doubt that such a change would cause many such post offices to fail.
At a time when the banks are intent on closing branches, the concurrent loss of rural post offices would cause considerable hardship, particularly to the more elderly rural population who are often ill served by public transport. Many could face a situation where they have no local access to either post office or bank.
New clause 1 refers to a scheme, but clearly not all sub-post offices will be affected in the same way. The hon. Member for Batley and Spen expressed disquiet about the Government's proposals and said that there were at least two post offices in his constituency where more than 75 per cent. of their business comes from paying benefits and making other social security payments. Such post offices will be hit early by the changeover to ACT. When the Secretary of State responds, will he tell us whether any scheme that the Government intend to introduce will be graded so that it responds to the sub-post offices that run into difficulties earlier than the others? Alternatively, will the Government seek national coverage and wait until the position nationally gets desperate? That will inevitably mean that a few sub-post offices will go to the wall before the Government have introduced any scheme if, indeed, they genuinely intend to do so.
The users of sub-post offices are, by definition, often the most vulnerable in our community. As Milcombe parish council says, the proposal envisaged by the Government
will hit the most vulnerable members of the community, i.e. senior citizens, those on benefits, single/young parents unable to travel, disabled, those without their own vehicles living in villages without public transport. The majority of these people do not have bank accounts and have no access to the nearest town. Remember also that banks in rural areas have also been closed down.
Mr. Holloway, the sub-postmaster at Steeple Aston, sent me a cogent letter summing up the views of all of those postmasters involved:
The nearest bank to our village is twelve miles distance and with limited public transport, banks are largely unavailable to a large section of our community. Most of these people are elderly, disabled, poor or disadvantaged in other ways and rely on their local Post Office and village shop. Modern technology is beyond them and of little help.
He continues:
if we lose the Post Office or if the income generated from it is greatly reduced, the viability of the shop comes into question. Secondly, if people go into town to obtain their money, costing them

nearly £3.00 return bus fare, or for the luckier few, a similar amount for petrol and parking, then they will shop in town (while they wait several hours for the return bus) again, affecting the income of the shop.
My right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) made a telling point about that. The general footfall of business resulting from the fact that post offices presently pay benefits is crucial to many businesses. Post offices want customers, not subsidies, and if customers stop coming for whatever reason, they will lose the post office business and the business of the village shop.
Mr. Holloway says:
If we lose the Post Office, it is more than likely that the shop will be forced to close. If that happens the heart of the village will be lost. Steeple Aston is "still" a village community. The shop supports most of the activities, by acting as the ticket office for many events, a collection point for information on activities, advertises events and activities and promotes many clubs and village organisations.
The shop also acts as a meeting point, many villagers meet at the shop, by arrangement, or largely by chance, which helps them keep in touch. Many of the older villagers find it an important social focal point, without it they will be largely isolated.
We keep a look out for the old and infirm, if someone fails to come to the shop, we arrange for a neighbour to call and check on them. We also act for the Health Centre (a couple of villages away) by handling the issue of repeat prescriptions, for people on regular medication, if the prescriptions are not collected, we can again check on the well being of the recipient.
It is difficult to put a value on these services, but without them the quality of life in our village will be greatly reduced.
The huge number of people throughout the country who have signed petitions makes it clear that the people of the United Kingdom have no doubt about the value of post offices and sub-post offices in villages as well as in towns and on the edge of towns.
We could accept—or at least have greater confidence in—the Government's commitment to maintaining the integrity of the post office network if the Secretary of State was not quite so opaque. The new clause is not a simple amendment, but contains a number of subsections and paragraphs, ending with a damning conclusion that nothing will happen without the express permission of the Treasury.
Under those circumstances, no one can have any confidence that any money will be forthcoming. Whatever acronyms are used for sorting out the public spending round, such as DELs—or even Delboys—nothing will happen unless the Department of Trade and Industry makes a bid for funds from the Treasury. The Secretary of State has made no commitment today that might demonstrate that he is prepared to do even that. Indeed, as Hansard will show, remarks do not contain a single sentence that might give the House an indication of the precedent conditions on which such a scheme may be introduced. There has been no indication whether a scheme will be introduced based on the number of post offices being closed or the viability of failing post offices.
Imagine someone coming to one of our constituency surgeries on Friday or Saturday saying, "You were in the House and heard the Secretary of State first-hand. I am running a village post office and want to know whether I should sell it or invest to expand. Can you explain the circumstances in which I might be entitled to a subsidy to run my business?"
None of us in such a position would be any the wiser, as the Secretary of State has given the House no information giving us confidence that money for any


particular sub-post office would be forthcoming, and he has not mentioned the terms or circumstances of such a grant.
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Of course, the fact that we have got this far is greatly to the credit of people throughout the country, including many Members of Parliament, parish councils, post offices and communities involved in the campaign to save village post offices. At the last moment, the Government have been willing to make a nominal concession, even though they were not prepared to make any concessions in Committee. The Secretary of State in his reply must give the House better guarantees than he did when opening the debate, and reassure us that the subsidy will be genuinely forthcoming and is not simply a sop to get the Bill through Report and Third Reading or, more significantly, to get the Government through the haemorrhaging of Labour support in the local government elections on 4 May.
The Government Whip, the hon. Member for Plymouth, Devonport (Mr. Jamieson) may laugh, but like my colleagues, I have spent the greater part of the past two weeks knocking on doors in my constituency. When one has been a Member of Parliament for as long as I have, one has walked the streets many times before. I can tell the hon. Gentleman that he need not look forward to waking up on 5 May.
Announcing a subsidy would be pitiful if it were simply a sop to get the Labour party through a massive loss of seats in local elections in rural areas on 5 May. On the other hand, it could be a genuine attempt to address what the Government now accept as a real problem resulting from the introduction of automated credit transfer, which would undermine the long-term viability of the rural post office network. The Secretary of State owes it to the House and the rural post office network to give Parliament and the country much more information about how the new clause will operate than he has done so far.
Of course, had the new clause been introduced in Standing Committee—as it should have been—we could have spent some time cross-examining the Secretary of State or the Minister for Competitiveness; we could have tabled parliamentary questions and fleshed matters out. Introducing what the Secretary of State himself admits is one of the most important clauses in the Bill on Report is a discourtesy to the House—although that is neither here nor there—and, much more importantly, avoids proper scrutiny, giving the impression that the new clause is not a matter of substance, but a sop. By such means, the Government hope to convince people that they are doing something for rural post offices when, in truth, they have little intention of doing anything to protect the integrity of the rural post office network.

Mr. Howard Flight: As my hon. Friend the Member for Banbury (Mr. Baldry) has just pointed out, the debate has exposed the fact that new clause 1 is of no value in addressing the problem. Whether it is con or sop, it fails to make explicit specific sums of money, periods of time or circumstances, and therefore will not help a retiring sub-postmaster sell his post office and will make no difference to his position. I hope that

the Government are not deliberately intending to mislead the public and sub-postmasters in presenting the new clause purely as a piece of window-dressing. Whether or not that is their intention, the new clause does not solve the problem.
The whole House, I believe, thinks it essential for post offices to develop new business corridors. Recently, I had a long conversation with a sub-postmaster in my constituency, who spoke enthusiastically about Horizon and how he would sell people tickets for theatres, travel and so on. The closure of branches by clearing banks provides a great opportunity for the post office network to do the grassroots job of banks and to pick up banking business. I shall focus on the latter point. Sub-post offices are a network in the banking business, serving the underprivileged community whom the Government like to call the socially excluded. Massive effort has been expended by the Government in focusing on the socially excluded and the fact that they do not have banking services; we have also heard lots of humbug, talk and waffle about credit unions.
The network of sub-post offices is the ideal network to provide banking services for the socially excluded. Its banking business should be supported, and the proposed version of ACT should not be introduced. I have a vision of the post office network of the future providing banking services to people who currently do not have them, in the more depressed areas of Liverpool and other rundown cities. The future of the sub-post office is not just a rural issue but an urban one.
A huge opportunity is being lost, and I urge the Government to think again and to postpone the introduction of ACT. They should plug in their social exclusion unit, which is advising them that the 20 per cent. of the community who do not have bank accounts should have them. Those people will not get accounts from the clearing banks, which are closing their branches. The Government should work with sub-postmasters—that splendid body of self-employed small business men—under the umbrella of what is in essence a public sector body. They are just the job to provide what is missing in banking services for our community.
Why waste the time of the House? Why try to mislead postmasters with the empty promise of new clause 1, which will not stop the collapse of the sub-post office network? It is at best honestly intended, and at worst purely a con, but it will not make post offices saleable when postmasters retire. The Government must think again, delay ACT and think constructively about how the sub-post office network can be rebuilt in the future.

Mr. Prior: At the beginning of the debate, my hon. Friend the Member for South-West Hertfordshire (Mr. Page) described new clause 1 as the Corporal Jones clause. That was an accurate description. The new clause has been forced on the Government at short notice in response to 3 million names on a petition, pressure from the Opposition, the forthcoming local elections, and a realisation that the introduction of ACT would have a dramatic impact on many thousands of sub-post offices around the country.
This evening we have heard that up to 75 per cent. of the income of a sub-post office can come from the payment of benefits and pensions. In my constituency, the level of income from that activity can be well over 50 per cent. It can be a great deal more when one takes into account the footfall impact if there is a village shop alongside or within the post office.
The most objectionable aspect of new clause 1 is the thought behind it—the assumption that commercial activity can be replaced by Government handouts. It is assumed that the entrepreneurs—the decent men and women who run sub-post offices—will be happy with handouts from the Government on an entirely discretionary basis.

Mr. Letwin: Was it not remarkable that when we asked the Secretary of State whether he intended a temporary subvention to enable viability on a commercial basis thereafter, or a permanent discretionary subvention, he produced what can best be described as extremely elegant waffle?

Mr. Prior: My hon. Friend is too kind. It was cosmetic flannel. The new clause is designed as a sop, as my hon. Friend the Member for Banbury (Mr. Baldry) said, to enable the Government to get through a few difficult weeks. It will become increasingly apparent to sub-postmasters and mistresses as time goes by that, under the new clause, they will be exchanging a commercial business and an income stream for which they have worked diligently over many years for handouts from the Government. No one who has been in receipt of handouts from the Government will consider that a reasonable swap.
I do not believe that the savings of £400 million a year identified by the Treasury will be realised. As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said, there is a maxim in the Treasury that savings in one Department must take into account the extra costs in another. It is clear from new clause 1 that there will be costs in other Departments to offset those savings.
Post offices will not be able to replace the loss of income with Government subsidies, and the post office network will be increasingly vulnerable. The new clause is wholly unsatisfactory, a fact that the Opposition view with a great deal of suspicion. As time goes by, sub-postmasters and mistresses across the country will realise that they have been sold a pup by the Government. I hope that the Government will think again carefully about delaying for a long time the introduction of ACT.

Mr. Brady: I am pleased to have an opportunity to speak briefly in the debate on new clause 1, especially as I want to flag up the importance of the sub-post office network, not just in rural areas, which have been alluded to at length, but—

Mr. David Jamieson(Lord Commissioner to the Treasury): indicated assent.

Mr. Brady: I see that I have some support from someone on the Government Front Bench, for which I am grateful. As I was about to say, the network is also important in urban and suburban areas.

Mr. John M. Taylor: On the point that my hon. Friend is developing—the assumption that we are speaking of a rural problem, whereas in fact it is an urban problem—will he speculate whether those who do not have a bank account and are unlikely to have one are predominantly in rural or urban areas?

Mr. Brady: I suspect that they are in both but that there is a large concentration of those people, whom the Government sometimes choose to refer to as the socially excluded, in the urban areas and in suburban areas. In parts of my constituency, some fairly large council estates at present have the benefit of some local shops and post offices, which are being placed under threat by the Government. I am sure that that is the case also for many Labour Members. There is widespread concern that the facilities that are currently available for people in those circumstances may be removed.

Mr. Letwin: Will my hon. Friend allow me to say that the right hon. Member for Birkenhead (Mr. Field) who is, alas, unable to be in his place, but who is the chairman of the all-party group of which I am the secretary, specifically asked me to mention in the House that he believes that it would be a disaster if measures were taken exclusively for the rural areas, because as my hon. Friend said, it is classically in the urban areas where a great part of the problem lies?

Mr. Brady: I am grateful to my hon. Friend for making that point, and for the opportunity to pay tribute to the right hon. Member for Birkenhead (Mr. Field), who speaks a great deal of sense on many matters, and who shares my determination to defend the excellent grammar schools that we have in some parts of the north-west—another issue on which I have considerable sympathy with the right hon. Gentleman.
The hon. Member for Weston-super-Mare (Mr. Cotter) paid a rather bizarre compliment to the Secretary of State, by suggesting that he had been both open and opaque in his presentation. Presumably that was intended to be at least half a compliment, but the only translation that I could come up with was that the hon. Gentleman was accusing the Secretary of State of being transparently evasive in what he is doing.

Mr. Taylor: Would it not be more appropriate to say that the right hon. Gentleman was incandescently obscure?

Mr. Brady: I am grateful to my hon. Friend. No doubt the creativity of our hon. Friends could produce many other variants.
New clause 1 provides no certainty whatever. It sets out no ground rules for determining whether there should be a subsidy, when there should be one, or how it should be applied. Important issues arise for sub-post offices in urban and suburban areas, where the market circumstances may be rather different from those of isolated rural sub-post offices. There are conceivably many instances when a town, village or community in an urban or suburban setting might have more than one post office. It is quite possible that both, or all, those post offices would be threatened, because they might all depend heavily on the income that they currently derive from the payment of pensions and other benefits.
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New clause 1 contains no criteria or ground rules suggesting how the Government would conclude whether one, both or all the post offices in question would be supported. Presumably, if their principal objective is to preserve a community service, the logic can extend only to support for one post office, because that would achieve the aim of securing the service on whose protection they wish to spend public money; but how are they to decide the way in which the subsidy is granted? Should they divide it between the post offices in an attempt to protect them all, and in so doing perhaps risk losing them all? The Secretary of State has been utterly opaque, and I can only assume that he has been deliberately opaque.

Mr. Swayne: May I suggest a reason for that opacity? Last Wednesday most Labour Members had a very disagreeable day. Anyone who was downstairs in the canteen and saw them buying tea for their constituents in order to salve their consciences will realise that new clause 1 is an emergency measure tabled by the Secretary of State to deal with the consequences of that disagreeable day, and that its lack of clarity results from the fact that none of it has been thought out.

Mr. Brady: I am always delighted to hear that members of the public have received some benefit from their Labour representatives. Even if it only runs to a cup of tea, that is a considerable improvement on what might otherwise be on offer—although, in this instance, the cup of tea seems inadequate compensation for the loss of a vital public service.
I hope that when he responds the Minister will put some flesh on the bones of new clause 1 by informing us of at least some of the criteria that are intended to apply to the distribution of subsidy to the post office sector as a whole, and to the distinction between different types of post office. I assume that the Secretary of State hopes to retain the public service benefit; what "map" has he in mind, in terms of the density, or distribution, of sub-post offices? What would the Government regard as the minimum requirement? How far does the Secretary of State think it reasonable for a pensioner or recipient of other benefit—perhaps a disabled person—to have to travel? What travelling time does he consider appropriate?
As in other contexts, some Members may be more concerned with the interests of large rural areas. As only a small part of my constituency is rural, I tend to turn my mind to the suburbs. It may take a person living in a suburb or city just as long to travel to a sub-post office as it takes someone in a rural area to traverse what is, in absolute terms, a greater distance. I should like to hear what criteria the Secretary of State would consider necessary to trigger, or justify, subsidy in such circumstances.

Mr. Bercow: I am sorry to pursue my hobby-horse again, but does my hon. Friend agree that it is vital in terms of confidence for us to have information confirming that the criteria are specific and precise and lend themselves readily to objective assessment, so that we can be assured that decisions will not be made—either by the Secretary of State or by his agents—according to arbitrary fiat or political preference?

Mr. Brady: I entirely agree. It is important both for steps to be taken to ensure that the subsidy—if there is

any—is distributed fairly, and for a clear rubric to be set out explaining how it will be distributed and in what circumstances. Sub-post offices and those who depend on them must have some guarantee that new clause 1 will actually deliver.
The fairness and clarity called for by my hon. Friend are particularly important in view of the disproportionate effect that the proposals may have on certain social and demographic groups. According to recent newspaper reports, the Labour party has now decided that it has no intention of targeting the elderly, because it does not think they are likely to vote Labour in the future.

Mr. Bercow: And it thinks that they are all racists.

Mr. Brady: Indeed.
Admittedly, I hope that most people who have achieved a certain age will have the wisdom not to vote for the Labour party; but given that Labour has said in internal strategy documents that it has no intention of appealing to the pensioner vote, we are forced to ask again what exactly is the purpose of new clause 1.
If any substance were given to the new clause—if the Government acted to protect sub-post offices—many pensioners would benefit. As my hon. Friend suggested, it would be entirely wrong for the funds, if there are any, to be distributed according to party advantage. That surely would not happen under the present Government, but I venture to make another suggestion.
The new clause was introduced at a late stage. It is a panic measure, tabled in response to a large petition, a lobby of Parliament and the sudden realisation that this was a matter of great public concern. Given that the whole project was conceived as a response to obvious public dissatisfaction and worry about the closure of post offices, we must be left with the suspicion that if the new clause is adopted, and if the Treasury ever agrees to provide funds to back it up, what decisions are made may well depend on who is prepared to shout loudest and make the biggest row about the possible loss of post office services in their communities.
Let me now say something about the concern caused by the Government's general policy of moving towards a subsidised system of provision.

Mr. Bercow: Before my hon. Friend embarks on his new point—which I await with beads of sweat on my brow, and with eager anticipation—let me ask him this. Does he agree that, in view of the Secretary of State's opacity, and the uncertainty about the final form of the scheme, it is important that the regulations—subject to the affirmative procedure—should also be subject to a minimum consultation period of three months?

Mr. Brady: My hon. Friend makes a wise point. I was not, of course, going to comment on the beads of sweat that are apparent on his brow. It is indeed important that there should be proper consultation and an appropriate period for consideration of the detail of any proposals that the Secretary of State may present at some point in the future. Those who have a legitimate interest or anxiety, whether they run sub-post offices or depend on their services, should be able to express their views before the affirmative resolution procedure is implemented. We can hope for a truly fair, clear and reasonable system only if that happens.


Even if all those criteria are fulfilled, we are left in an unfortunate position. The Secretary of State claims that his objective is to encourage greater commercialisation of the Post Office and greater entrepreneurship in sub-post offices, yet all his actions and proposals will achieve the opposite. Far from encouraging entrepreneurship or persuading sub-post offices to explore methods of maximising their income by providing services, the Secretary of State will lead them to dependence on public subsidy. By following that unfortunate path, he may achieve the reverse of his intentions, discourage entrepreneurial endeavour and proper commercial activity in sub-post offices and push them towards a model of employment status, or even the status of a nationalised service.
It is bizarre that some Liberal Democrat and some Labour Members have tried to link the new clause with privatising the Royal Mail. That argument is entirely bogus because, as my hon. Friend the Member for South West Hertfordshire (Mr. Page) pointed out, sub-post offices are already predominantly in the private sector. New clause 1 is far from being a proposal for privatisation of post office services; indeed, it is a proposal for the potential nationalisation of part of the network.
New clause 1 would discourage entrepreneurial activity, commercialisation of the network and the independent small businesses that have served communities so well for many years. I repeat the caveat that we do not know whether new clause 1 will be accepted. However, if it is to have substance and revenue to support it, or if it is to be effected meaningfully, it will encourage a state, nationalised post office service. If that happens, the fears of my hon. Friend the Member for Buckingham (Mr. Bercow) will be realised. We are considering a planned economy and the ability of Ministers and their officials to decide how to provide services by determining the number of post offices, their location and the sort of communities they should serve.
The problem is of the Government's making. The Government have put in train changes in the payment system for pensions and benefits that will cost the sub-post offices an enormous sum. As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) said, the Government's proposals do not have the benefit of a saving to the Exchequer. The tabling of new clause 1 is an admission that an administrative development, which will cause real suffering and difficulty for many people, has no true financial benefit.

Mr. Stephen Day: That is modernisation.

Mr. Brady: People are beginning to understand that modernisation sometimes causes genuine problems. It damages their communities and the provision of public services. It may be an attractive buzz word for those on the Treasury Bench, but it means nothing and provides no benefits for ordinary people.
I hope that the Secretary of State will make some concrete commitments. If he stands by new clause 1 and has genuinely acted in good faith by tabling it to try to rectify some of the problems that the Government are creating for sub-post offices, we need to know how its provisions will be implemented.
What are the financial implications? We want to know not only the cost but how the subsidy will be distributed between different sub-post offices, and on what criteria. Will the subsidy go to rural, suburban or, urban areas? What priority will be given to ensuring that the elderly have their post office services protected? What priority will be given to ensuring the provision of sufficient post office services in areas of deprivation, or places with large populations, which depend on benefit payments through post offices? We can have confidence in new clause 1 and the Secretary of State's good faith in trying to save post offices from Government attack only if he can provide concrete assurances and make genuine commitments this evening.

Mr. Eric Forth: I want to explore the key word of the debate—opacity—in the context of new clause 1, and link it to a potent point that my hon. Friend the Member for Banbury (Mr. Baldry) made. He pointed out that, through accident or incompetence—it does not matter which at this stage—we are in an invidious position. We have been presented with a comprehensive new clause—which, according to the Secretary of State, forms the core of the Bill—not in Committee, where it could be properly scrutinised and amended, but on Report when there is an element of time pressure. That speaks volumes for the way in which the Government go about their business. Their actions, taken in a panic and at the last minute, are ill thought out and poorly understood—and that applies to the Secretary of State's actions, let alone to those of anyone else. In the limited time available, we must attempt to discover from the Secretary of State what lies behind the new clause.
New clause 1 is shot through with incongruity and phrases that mean little if anything to me. We want to ascertain whether they mean anything to the Secretary of State. Our old friends "may" and "shall" are the subject of other amendments in the group. The new clause would provide that the Secretary of State "may", if he sees fit, implement its provisions. It contains no guarantee for the sub-post office network. We are therefore considering a discretionary matter. The provisions may or may not be effected, depending on the whim of the Secretary of State of the day. The current Secretary of State's successor may be in place more quickly than even he can imagine. Does he feel that he can commit his successors to such a provision?
The use of the word "may" is significant. I hope that the Secretary of State can reassure us and the sub-post office network that "may" will be replaced with "shall". That will at least make clear the intention of new clause 1, and show that the provision is not discretionary. I hope that the right hon. Gentleman will comment on that when he winds up.
Difficulties arise with paragraphs (a) and (b) of subsection (1). They make an interesting distinction between
assisting in the provision of public post offices
and
assisting in the provision of services to be provided from public post offices …
On the face of it, that may seem to make the most comprehensive provision of all. If that is the intention, it deserves our limited support. However, subsection (1)


could contain an important distinction that may cause much confusion and uncertainty as to whether the Secretary of State truly intends to assist
in the provision of public post offices …
Does that not imply the possibility of new sub-post offices being provided, were they to be deemed necessary?
We want to know about that because until now, the process has been seen as one of irreversible decline. If the Secretary of State can tell us that there may be circumstances in which a new sub-post office could be brought into being by the provision, some rural areas in particular might take encouragement from it. That needs to be clarified.
There is also doubt about who would implement the proposal as the new clause provides that that may be done either by the Secretary of State or by someone else on his behalf. That is an important distinction. Were it to be the Secretary of State and were he prepared to give undertakings to the House now, that, too, might be somewhat reassuring, but if we were told that he at least had in mind the possibility that some other person or agency would deliver the mechanisms—the new clause would allow that—we would already be at one remove from what has been said during these proceedings. Whatever reassurance he may be able to give us, how could he guarantee that his agent or agency, or any other person acting on his behalf, would have the same commitment to doing what we have been told would be done? That is always supposing that we get some commitment from him; we have had none yet.
The new clause appears to describe the scheme in detail, but it turns out that that is not the case at all. The scheme
shall specify …the descriptions of payments …
which is fair enough, and
the descriptions of persons to whom such payments may be made…
We can all imagine that they would be sub-postmasters or someone of that kind. It shall also specify
the person by whom such payments may be made …
which refers back to the possibility that that may be someone other than the Secretary of State—but we then come to the matter of criteria, which has already been touched on in this short debate.
My hon. Friend the Member for Buckingham (Mr. Bercow) made a plea in an intervention. He said that to be meaningful, the criteria should be clear, concise and well understood. One can see what he means. However, he will recall that my hon. Friend the Member for Banbury pointed out in his excellent contribution that in many ways, sub-post offices perform a social service in their community and often provide support, advice and help to their customers. How could one express that in the criteria to which the "person" would have regard in deciding whether payments had to be made? The matter seems straightforward on one level. However, on another, if the Secretary of State ever accepts that sub-post offices have a crucial social and community function to perform, how will he factor that into the criteria so that payments will be made under the scheme? These matters are not trivial; they are of the greatest importance.
If we were told that the Secretary of State had no intention of paying any regard to social matters, that would give rise to suspicion that what appears, on the face

of it, to be a comprehensive scheme was cobbled together late in the day without sufficient thought. No one—least of all, regrettably, our excellent sub-postmasters and sub-postmistresses up and down the country—should imagine that the proposal is the solution to their problems. Would that it were otherwise. If we had had a proper chance to examine the new clause, we might have been able to make more progress in that regard.
Subsection (5)(a) refers to "conditions as to repayment". That strikes me as an important and potentially sinister provision. For the first time, there is a reference to repayment being made, which clearly implies that it is in the Secretary of State's mind that any moneys paid to sub-post offices under the new clause may have to be repaid in some circumstances. We must know an awful lot more about what "repayment" means before we can give our approval to the new clause. It could mean any number of different things, and repayment could take many different forms. We need to know what "conditions as to repayment" could mean before we can feel reassured by the new clause.

Mr. Bercow: My right hon. Friend is very experienced in these matters and he is right to smell a rat. Is not his suspicion reinforced when he reads subsection (6), about which there has been considerable commentary? It refers to the requirement for
the consent of the Treasury.
Does not it appear that the Chancellor has agreed to the proposal only on the basis that it might never happen? If it does, the cost will be recouped, as usual, in the old stealthy Labour way.

Mr. Forth: That, of course, suggests itself not only to my hon. Friend, but to most of us who have taken even a brief moment to study the new clause. I shall come to subsection (6), but time is pressing and I do not want to delay the House unnecessarily. I simply say that we have all spotted the Treasury's grubby hand on the throat of the new clause—it cannot be concealed. We need to know what the Secretary of State thinks his relationship with the Chancellor is, what guarantees he has or has not received from the Chancellor, and whether he thinks that the payments that he envisages being made will be both adequate and guaranteed. If they will be neither, the measure is worthless.

Mr. John M. Taylor: Is not the proper interpretation of our constitutional affairs that a Government are collectively responsible? There are no separate Ministers in that sense; all are part of an entity. Is it not therefore curious and extremely offensive that one part of the Government has to seek the permission of another?

Mr. Forth: My hon. Friend, who has enormous experience of those matters, knows that what he says is literally true, but I fear that the entity that matters in this regard is that referred to in subsection (6)—Her Majesty's Treasury and the Chancellor. We need to hear a lot more from the Secretary of State about his relationship with the Chancellor, with specific reference to what the Secretary of State will no doubt claim are the reassurances in the new clause.

Mr. Bercow: rose—

Mr. Forth: I give way for the last time.

Mr. Bercow: Does not my right hon. Friend agree that it is important, not least for the self-respect of the House, that we should be assured that we are not debating the matter in a vacuum? Would it not therefore be helpful to know whether the details of the scheme and the extent of the Treasury veto over them have already been determined, but, for political convenience, will be rolled out later, or whether the Government simply have not got round to thinking them out at all?

Mr. Forth: That remains to be seen. The debate may or may not be taking place in a vacuum, but our great fear is that the new clause is vacuous.

Mr. Brady: Will my right hon. Friend give way?

Mr. Forth: Yes, but then I must conclude.

Mr. Brady: I am most grateful to my right hon. Friend. Does he agree that it would be more convenient for the House, and that a lot of difficulties in the Government would be avoided, if the power to make the decision were given straight to the Treasury instead of the Secretary of State? We could cut out the middle man.

Mr. Forth: My hon. Friend has stumbled on an important answer. Subsection (3) refers to "another person"; obviously, that is the Chancellor. We may not need an answer from the Secretary of State; my hon. Friend has given it to us, which is very helpful.
My final question to the Secretary of State relates to subsection (5)(c), which contains a typically opaque reference to
the modification of the functions of a body established by an enactment …
What on earth can that mean? Either it means nothing at all—the parliamentary draftsman must have been suffering from his now customary flu—or it is a sinister provision, the meaning of which has been completely, cleverly and subtly hidden by the parliamentary draftsman and sanctioned by the Secretary of State. We need to know what it means.
The new clause will not do, unless the Secretary of State is prepared and able to give detailed, specific and reassuring explanations and guarantees that it contains much more than any of us has hitherto been able to identify.

Mr. Letwin: I find myself in the unusual position of joining my hon. Friend the Member for South West Hertfordshire (Mr. Page) on an unaccustomed Front-Bench team. It is all the more unusual because I have a certain fellow feeling for the Minister for Competitiveness—in the past little while, we have both spent a large part of our waking hours thinking about post offices. The difference between us is that I dream about them, whereas I suspect that he wakes up having had nightmares about them.
New clause 1 has been introduced by the Secretary of State with all the appearance of a matter of settled policy. It would be fine if it were. As my hon. Friend the Member for Arundel and South Downs (Mr. Flight) eloquently mentioned, all hon. Members on both sides of the House attach huge importance—I do not exempt the Minister—to the post office and sub-post office network. That is common ground. If the new clause were an example of a clear-minded and settled policy to deal rationally with the future of our sub-post office network, we would all be happier.
What has come out in this debate often comes out in debates, even on Report, and I share the sentiments of many of my hon. Friends in decrying the fact that the new clause has been introduced only on Report: there is a great lack of clarity of purpose. As my hon. Friends the Members for Altrincham and Sale, West (Mr. Brady) and for North Norfolk (Mr. Prior) pointed out, when the Secretary of State was pressed and pressed again to state whether the new clause is a single, simple measure to enable sub-post offices to do what I think we all want them to do—invest in the technology that will give them a viable future alongside ACT—or whether the measure will permit the continued subsidisation of sub-post offices as a substitute for a viable future, the Secretary of State refused point blank to answer the question in a fashion that would have satisfied the House.
I suspect that the Secretary of State refused to answer for the reason to which many of my hon. Friends have drawn attention, not least my right hon. Friend the Member for Bromley and Chislehurst (Mr. Forth) because the new clause is not a matter of settled policy. It is something that the Secretary of State introduced at a late hour to solve the problem of having to face 18,000 birthday cards, 2,000 sub-postmasters and 3 million signatures. That is not the way in which to conduct public policy on any matter, let alone a matter that is as important to the nation as the maintenance of the sub-post office network.
As my right hon. Friend the Member for Hitchin and Harpenden (Mr. Lilley) pointed out, many of us predicted months ago that introducing ACT without a proper pause for reflection and without taking time to introduce alongside it the proper technology, which would enable sub-post offices to engage in activities that keep their footfall and revenues aloft, would result in subsidies. When I first mentioned that in the House, the Secretary of State looked as if someone had said something that was rather impolite. Apparently, it was far from his thoughts that he would end up spending the money that the Secretary of State for Social Security was ostensibly saving but, some months later, what do we have? We have a new clause with the vaguest and widest possible permissive powers to administer subsidies and to make up for some unknown deficiency, through the administration of an unknown quantity of grant. Our predictions were wholly fulfilled.
The ingenious interpretation of subsection (1) by my right hon. Friend the Member for Hitchin and Harpenden, which showed that, at least on a prima facie reading, the new clause could be used to subsidise banks as well as sub-post offices, points us in the direction of something that, either by the means in the new clause or by other means, we will in due course see. The Government will need not only to keep the sub-post offices alive, but to subsidise the banks.
From the beginning of the saga, the Department of Social Security never properly considered whether the banks could willingly take on as customers a very large number of people currently in receipt of benefit and pension. That deficiency will have to be paid for through taxpayers' money. If the Secretary of State thinks that that is an impolite thing to say, I challenge him to come back and to admit to the House, in due course, when he or another of his colleagues introduces a positive proposal to subsidise the banks, that we were right, just as our predictions earlier that sub-post offices would need to be subsidised have proved to be right.
What do we have here? We have what is becoming a familiar and important theme of the Government. First, action is taken which, although not necessarily ill-intentioned, is ill-thought through. Secondly, a major industry or service is adversely affected. Thirdly, a Government who came to power telling us that they had learned the lessons of free market economics engage in solving, or in attempting—usually unsuccessfully—to solve, the problem through increased subsidy. We have seen it in agriculture, in the car industry and in the coal industry; now we see it in sub-post offices. It is a lamentable rhythm, but it is beginning to become extremely familiar.
In the case of sub-post offices, it is highly ironic because the only reason for the adverse effect on sub-post offices is that the Secretary of State for Social Security thought that he was going to please his former master, the Chancellor of the Exchequer, by saving £400 million. That £400 million is an extremely mysterious entity. No one knows how much of it is due to payments that go to the sub-post offices, how much is due to payments that go to Post Office Counters and how much is absorbed in internal administration. However, let me take a guess that, at present, at least half of it goes to sub-post offices by one means or another.
Let us imagine that everyone who would come in to collect a benefit or a pension—who, in that case, will not spend, on the Secretary of State's figures, roughly 50p of taxpayers' money on having that benefit or pension available for collection at the post office—is also not going to spend at least as much again in gross profit contribution: he or she is not going to buy things in the post office. I do not know whether that is the right or the wrong number. The Secretary of State undoubtedly knows, but he has long since forsworn any effort to tell us.
As my hon. Friend the Member for Altrincham and Sale, West and my right hon. Friend the Member for Hitchin and Harpenden said, we need to know the answer. Let me speculate that the answer that I have given is approximately correct: £200 million will be directly lost by the sub-post offices, and about another £200 million will be lost through lack of customers. What, then, would the subsidy need to be wholly to replace that lost revenue? Amusingly, it would be £400 million. That is why we believe that, if the Secretary of State is continuously to re-subsidise the post offices to the point that they were at before the Secretary of State for Social Security began his attack on them, he will need to spend about £400 million a year of taxpayers' money.
The Secretary of State has not said so. He has not said a word about how much he will spend. He has not said whether it will be a large or small amount, but we are

justified in assuming that the cost of the injudicious measures of the Secretary of State for Social Security will be enormous.
During the debate, two problems have emerged in relation to that enormous sum of money. First—my hon. Friend the Member for Altrincham and Sale, West made the point clearly—when subsidies are administered on a continuing basis, they create subsidy dependence. They divert the attention of the business man—in this case, the sub-postmaster or postmistress—from running the business and towards maximising subsidy.
That is a danger to the sub-post office and to any industry that suffers from it. It is a danger about which we thought the Government had learned because, before they came to power, they preached the virtues of a market that was not subsidised. However, it turns out that, when it comes to sub-post offices, the Government's knee-jerk reaction is to create the very subsidy dependence that we all suffered from for so long and so deleteriously.
As my hon. Friend the Member for North Norfolk said eloquently, another reason why we should worry about continuing subsidy is that the subsidies themselves are vulnerable. As many of my hon. Friends pointed out, the new clause is permissive. It will go on being permissive because subsidies are never given as a matter of contract. Governments always, under all regimes, take great care to ensure that no one can ever claim a subsidy as a right. Therefore, subsidies are necessarily tenuous.
In the terms of new clause 1, the subsidy is described as "a scheme". It is indeed a scheme. It is a scheme to avoid a principal problem, and it is a scheme that could be as quickly undone as it has been established. Every sub-postmaster the length and breadth of the country will know that. Consequently, they will know that they are constantly under the threat of the subsidy being removed. Therefore, their attention will be focused in the wrong place, and their livings will be precarious. That is in no way a satisfactory result for sub-post offices; nor is it the result that they have been seeking. Sub-post offices have been seeking long-term commercial viability—not a subsidised or precarious existence, but a well-founded existence.
There is, however, a way. That is why Opposition Members have not been arguing against new clause 1, but have merely been drawing attention—as my right hon. Friend the Member for Bromley and Chislehurst did notably—to its drafting deficiencies.

Mr. Alan Johnson: Where is he?

Mr. Letwin: I am sorry that my right hon. Friend has departed the Chamber, but he lent much eloquence to us when he was here. He certainly drew attention to the lack of drafting. We have complained about that, and about many other matters.
We do not wish, however, utterly to oppose the new clause because it contains a better possibility—the germ of a decent idea. Rather than a continuing subsidy, there should be a pause—a delay and a reflection. In that time, the Secretary of State could use the powers provided in the new clause and by other means to install in sub-post offices proper technology, parallel—although perhaps different in character—to that which my right hon. Friend


the Member for Hitchin and Harpenden tried to install when he was Secretary of State, but which the new Government disrupted.

Mr. Johnson: No.

Mr. Letwin: Yes, the Government did disrupt it. I know that the Minister thinks that they did not, but he has forgotten that the previous Secretary of State for Trade and Industry was very clear in his statements that the project would be delivered, after which it was cancelled. I do not know why it was cancelled. I am sure that it was not Ministers' fault, and that they did not go round to destroy the computer. However, the fact is that, under this Administration, that project failed. It had not failed before. It did not seem to be failing, but when it did fail, the future of sub-post offices was put under threat.
There is now a chance that, if the Secretary of State uses new clause 1 not in the wrong way but in the right way—not to go on subsidising post offices permanently, but to inject, once for all, sufficient funds to provide them with the technology to enable them to go on providing benefits and many other services—post offices will keep their footfall and, therefore, their financial viability. If the new clause is used in that way, of course we would welcome it.
It is a sorry thing, however, when a Secretary of State—who is perhaps one of the more intelligent members of the Government—comes to the House with a new clause that is ostensibly derived from public policy and not merely a sticking plaster to deal with a political problem, but cannot answer the fundamental question: "Is this something that you intend to use as a means of permanently and unsatisfactorily subsidising sub-post offices into a gentle oblivion? Or is it a bold manoeuvre to try to give them, once for all, the modern technology that they need?" Why cannot he answer the question? He cannot answer because he has not decided.
In the past few weeks, to my certain knowledge, Ministers have had no fewer than six occasions in the House on which to announce their answer, and six times they have failed to announce it. That is why the new clause has been drafted in a manner that is—as many of my hon. Friends have said, using a polite word—opaque.

Mr. Bercow: Risible.

Mr. Letwin: Perhaps. However, the new clause's problem is not its opacity of drafting, but that the mind behind it is intentionally opaque because it has not yet been made up. It is a mind unmade. That is no way in which to introduce legislation.
I hope that, as a consequences of this debate, Ministers will go back to that dreadful place that they are forced to inhabit, think to themselves a little harder, and be able—perhaps in their Lordships' House—to include provisions in the new clause that tell us whether it is a devastating and disastrous piece of permanent subsidy or a perfectly sensible move to do what we have all been asking for for many months now.

Mr. Byers: This has been a debate of some interest, and I shall try to address the issues raised in it by right. hon. and hon. Members. It is worth reinforcing the point now, however, that new clause 1 simply gives the

Secretary of State for Trade and Industry the power to establish a scheme. The new clause is not about the details of that scheme or the form that it might take. It is purely about including in the Postal Services Bill a power for the Secretary of State to establish a scheme.
7.45 pm
I can understand the concerns that hon. Members have expressed about the details—such as whether the scheme will be temporary, whether it will be operated by means of a lump sum, and whether it will be a continuing obligation. The House will be able to consider all those details. New clause 1 makes it clear that the matter will be dealt with by the affirmative process. Therefore, there will be a debate, and there can be a vote on the scheme when it is introduced by the Secretary of State—if there is a decision to introduce such a scheme.
As I have consistently made clear, the provision is permissive; it is a matter of "may", not "shall". It is permissive because we do not know what the future will bring. I hope that the Postal Services Bill will receive Royal Assent and be on the statute book for many years. As I said on 12 April, when speaking on the issue, it is right that we should have a safeguard in the Bill providing the Secretary of State with a power to introduce a scheme. That is exactly what new clause 1 does.
My hon. Friend the Member for Batley and Spen (Mr. Wood) raised the issue of whether the scheme could be tailored, dealing with post offices individually. Yes, it can. I think that the scheme will be able to do that, so that there will be some flexibility and some targeting of support. However—to reassure the hon. Member for Buckingham (Mr. Bercow)—it will not be adapted, evolved or produced in a way that is politically partisan in any particular form. It will be based on the support that needs to be given to individual post offices, either for a post office itself as an entity, or for the continuation of certain services offered by a particular post office that the Government wish to support.
The right hon. Member for Bromley and Chislehurst (Mr. Forth) raised the issue of repayment. I appreciate the concerns that he expressed on the issue, and it is a shame that he has not stayed to hear me try to answer his questions. Nevertheless, I shall try to reply to the relevant points that he raised. As he missed my opening speech, he missed some of the reasons that I gave for the new clause. He then asked questions about some of those reasons. However, he did raise the important issue of repayment. Other hon. Members, too, may be concerned about the circumstances in which repayment of a subsidy or financial support may be appropriate. The matter should be considered very much within the context of provision of services.
Many of us hope, looking forward to a vision of post offices in the future, that post offices will offer services that go way beyond the services that they currently offer. Although more diverse services may be offered, some of those services may be offered at a loss to sub-post offices. I think that most people would say that, in those circumstances, if they are services that the Government wish to support, and if they are offered on behalf of the Government, it is appropriate for the Government to make a financial contribution towards the cost of offering them. Therefore, effectively a contract will be reached between the Government and the individual post office.
I believe that "subsidy" is a pretty poor description of that arrangement, as it is not a subsidy, but payment given for a service offered by the sub-post office. Because of the way in which the parliamentary draftsman has arranged the clause, the arrangement is called a subsidy. However, we will be paying for a service that the individual post office can offer.
If we pay for that service, but for some reason the service is not offered—if there is effectively a breach of the contract—repayment would be appropriate, as the Government would not be receiving the service that we paid for. In those circumstances, a power to seek repayment of the subsidy is an appropriate one for the Secretary of State to have.

Mr. Bercow: I understand the scenario that the Secretary of State has just depicted, and his explanation is helpful. However, under the regulations, could a sub-post office face a demand for repayment if it were granted a subsidy for one service, but made a modest profit on another service? Would the Treasury use the profit on the latter service as justification for demanding repayment of the subsidy paid for the former service?

Mr. Byers: We are talking about support for a particular service, and the arrangement would involve the finance coming from the Government to provide that service. Provided that that service is delivered, the sub-post office will have delivered on its side of the agreement, and there will be no question of money being clawed back because of a profit that the post office may be making somewhere else. That is why new clause 1 makes the distinction between the entity of a post office as opposed to a particular service that the Government may wish to offer financial support towards.

Mr. Brady: Is the Secretary of State guaranteeing that the measure will in no circumstances be used to allow this to be a loans scheme, under which payments would be expected to be repaid?

Mr. Byers: I am pleased to be able to confirm to the hon. Gentleman that nothing in new clause 1 would lead to that outcome.
On the matter of Treasury consent, whether hon. Members feel comfortable with it or not, we all know how government works. Individual Departments do not have their own budgets, and government works because of funds provided by the Treasury. There are many examples of legislation passed by this Government, and by the previous Government, where Treasury consent has been required before a particular scheme has been funded. That is not unique—it is a common arrangement.
The hon. Member for West Dorset (Mr. Letwin) referred to a continuing subsidy for the network. Clearly, he is unaware of the way in which the post office network operates, as there is effectively a subsidy at the moment. Rural post offices get up to eight times as much as urban post offices per transaction from the Post Office. There is a recycling of finance within the network at present and, effectively, many rural post offices are subsidised in this way.
I agree with the hon. Gentleman that we do not want post offices to rely heavily on subsidies for the services that they offer. That is why it is important to ensure that people do not automatically assume that the power within the new clause will be implemented for every single post office. Hopefully, we are talking about exceptional circumstances. We want to use the new Horizon project and the diverse range of services that can be offered following the computerisation of the network to allow new customers to come into the post office network.
We want the network to diversify into new Government services, so that problems over footfall can be addressed by the new customers. If we can get that diversity, any loss as a result of the introduction of ACT can be more than accommodated in terms of the new customers using the post office network.
As a result of the Government's commitment that any individual pensioner or benefit recipient who still wants to have his or her pension or benefit paid in cash at a post office will be able to do so, a lot of the scare stories about a large loss of customers should come to nought. Post offices will be able to convince pensioners or benefit recipients that they should remain as they are and continue to have their cash paid at the post office.
The hon. Member for Weston-super-Mare (Mr. Cotter) said that, last year, there had been about 500 closures. That is not the case. There were fewer than 400 closures last year, and that is not the highest number that we have seen. In 1984–85, 389 sub-post offices closed. The number of closures last year was below that figure.

Mr. Cotter: The Secretary of State may be correct, but there were 392 closures in the first nine months of this year, with the expectation that there would be about 500 for the year. The right hon. Gentleman can correct me if I am wrong.

Mr. Byers: The hon. Gentleman is wrong. The figure for 1999–2000 is 383. The way in which the figures are calculated is that we have the figures for last year, which will be updated. However, it is incumbent on all of us not to talk the post office network down. There are many thriving small businesses in the post office network, and they should be congratulated. It is important that people do not get an overall view that the post office network in total is experiencing difficulties, although I accept that some sub-post offices are.
The right hon. Member for Hitchin and Harpenden (Mr. Lilley) asked whether the power in new clause 1 allows the Government to subsidise banks. It does not. It allows for services to be subsidised, provided that they would benefit public post offices. It is worth reminding the House that many banks are already providing customers with access to their accounts through the post office network. The Alliance and Leicester, Lloyds TSB, the Co-operative Bank and Barclays provide access to their accounts through the post office network, and do so without any financial support. The Post Office is in fact making a profit from those schemes.

Mr. Letwin: Will the new clause allow the Secretary of State to subsidise a bank for providing a service through a post office?

Mr. Byers: It will allow the Government to support a service, provided that it benefits the Post Office. That is


clear. It may be that the right hon. Member for Hitchin and Harpenden was not as clear as he could have been—some might say that he was opaque—in talking about a subsidy to the banks. New clause 1 does not give the Secretary of State that power. We are providing subsidy support for a service that will be of benefit to the Post Office.
The principle is so important. Many post offices will welcome the fact that the Government, with foresight, are providing in the Bill a power for the Secretary of State to establish a scheme that can provide a subsidy. No one wants the post office network to rely on subsidies coming in year after year, but there will be occasions when the needs of a community will require the Government to make a financial contribution and to give support. New clause 1 gives that power to the Secretary of State.
The new clause is highly appropriate, and will be welcomed by postmasters and postmistresses up and down the country. It is not a replacement for new services—Horizon and computerisation will provide that, and we are spending £500 million to achieve that objective. Diversity into new Government services will bring new customers into the post office network. If need be, there should be a scheme in place to provide a subsidy. New clause 1 does precisely that, and I commend it to the House.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

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New Clause 2

RECOVERY OF COSTS OF THE COUNCIL ETC.

' The Secretary of State may give directions to the Commission as to—

(a) the inclusion in any licence of conditions requiring the payment of sums relating to the expenses of the Council or of the Secretary of State in relation to the establishment of the Council,
(b) the exercise of any power of the Commission to determine anything falling to be determined under such conditions:.—[Mr. Alan Johnson.]

Brought up, and read the First time.

Mr. Alan Johnson: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Mr. Michael J. Martin): With this it will be convenient to discuss Government amendments Nos. 35, 45 and 48.

Mr. Johnson: We turn to more prosaic matters. New clause 2 will enable the Secretary of State to require the Postal Services Commission to include a condition in any licence that part of the annual fee will be for the expenses of the Consumer Council for Postal Services—the replacement for the Post Office Users National Council—or the start-up costs in relation to that body. New clause 2 will also enable the Secretary of State to direct the commission on any matter that falls to be determined under such a licence condition.
It is now judged as proper that those being regulated should pay for all aspects of regulation, including the costs of the consumer body. It would not be sensible to give the consumer council its own licensing and

fee-raising powers. It is more efficient for a single body to collect all the necessary funds and to pay over the money required for the consumer council.
The establishment of the council will cause the Secretary of State to incur start-up costs above those normally associated with supervising the consumer council—which are budgeted for in the normal way—and it is appropriate that some, at least, of these should be recovered.
Government amendments Nos. 35, 45 and 48 are technical amendments that provide that the Postal Services Commission will have its own vote, like any other non-ministerial Government department. That will put it on a similar footing with the other utility regulators, and the amendments will, I hope, address the concerns raised in Committee by the hon. Member for Rutland and Melton (Mr. Duncan)—to whom we send our best wishes for a speedy recovery, although perhaps not speedy enough to participate in this Report stage—with regard to the provisions in schedule 1(12) for the Secretary of State to pay the expenses of the commission.
Government amendment No. 35 will delete clause 43(6), which would be otiose in the wake of Government amendment No. 45. There is no need for the provision for the commission to recover expenses from the Secretary of State, because the commission will, as a non-ministerial Government department, have its own vote. Funding of activities and any transfers between departments will be dealt with as with any other Government expenditure. Government amendment No. 45 provides that there shall be paid out of money provided by Parliament any expenditure incurred by the commission in consequence of this legislation. Government amendment No. 48 will delete schedule 1(12), because those provisions are no longer required, given the proposal effected through Government amendment No. 45.
Before I commend these technical amendments to the House, it might be helpful if I remind right hon. and hon. Members of our intention that the cost of operating a licensing regime, and the regulation of that regime, will be met through licence fees. Any expenses of the commission that were not related to those activities will need to be covered through moneys voted by Parliament.

Mr. Page: I start by thanking my hon. Friend the Member for West Dorset (Mr. Letwin) for his guest appearance at the Dispatch Box, as I was not allowed to wind up the previous debate for the Opposition. The Minister, if I may say so, sounds dreadful. It is obvious that the curse of the Postal Services Bill has struck him, although not as severely as it has struck my hon. Friend the Member for Rutland and Melton (Mr. Duncan). I hope that the Minister is restored to health soon and is a little more sympathetic to some of our amendments when they re-emerge in the other place.
I am not able to welcome new clause 2 with even the cautious optimism that I expressed on new clause 1. The Bill already makes provision in clauses 12 and 13 for those applying for licences to the commission to be subject to paying a reasonable fee upon application and to pay further sums when a licence is granted or during its operation, or indeed both. Unfortunately, it is still not clear what level of payments may be anticipated under those arrangements. Now licence holders face the prospect of paying towards the costs incurred by the Consumer Council for Postal Services or the expenses of the Secretary of State in establishing the council.
The truth is that the costs of the council will eventually be borne by consumers of postal services, but the Government prefer to disguise the impact of their regulatory requirements behind the payments to be made by licence holders. In the short term, it will be the poor old Royal Mail that will have to divvy up and provide the money to underpin financially the whole shooting match.
As the Minister has said, new clause 2 provides that the Secretary of State may give direction to the commission as to the inclusion of conditions in a licence requiring the payment of sums relating to the expenses of the council or incurred in setting up the council. Once again, we are being asked for a blank cheque. It might not be all that big a blank cheque, but we have already been asked to approve the money resolution today, and we have no idea what sums of money will be involved.
Neither do we know how much money will be involved under new clause 1. My hon. Friends pointed out on several occasions during the debate on that clause, which took some four hours—an indication of the level of concern and worry that they were feeling—that it was open ended and they would like some clue about the likely liabilities. However, we had no pointers from the Government. The same applies here, although at a lower level, and when we tried to get some limits set for both the commission and the council in Committee, we were brutally beaten down by the massed ranks of the Government.
What safeguards will exist to limit expenditure? Will we see a similar situation to that of the Office of Gas and Electricity Markets, which was formed following the merger of the Office of Gas Supply and the Office of Electricity Regulation? It bears repetition that Ofgem's budget has leaped from the £29.8 million spent by the predecessor authorities to an expected expenditure this year of £64.5 million, which is an increase of more than 100 per cent. As we keep saying, the extra expenditure will eventually feed its way through to the consumer—and it could turn out to be merely for extra bureaucracy. Once again, the Secretary of State will pull the strings and, as the costs work through the system, the extra money will have to found by the consumer.

Mr. Johnson: I thank the hon. Member for South-West Hertfordshire (Mr. Page) for his sympathy for my voice: if it does not last out, I shall complete this speech in semaphore.
In Committee, the hon. Gentleman made great play about the level of payments. The point that I made then, I shall repeat now. Yes, it will be what he called "poor old Royal Mail" or the Post Office that will have to pay the cost of the regulator and of the CCPS. That is because the Post Office is likely to be—in fact, it is inconceivable that it will not be—the only licence holder.
The principle that the regulated pay for the regulation is well established. Indeed, it was established in the Electricity Act 1989, the Water Industries Act 1991 and the Gas Act 1986, as amended by the Gas Act 1995, all of which legislation was passed under the previous Government. I ask the hon. Gentleman to bear in mind that, unlike all those other industries, the Post Office will operate in a privileged position because it will have a limited monopoly. The regulator will not regulate the

whole of the industry, as in telecommunications, gas and water, but only that part of the postal industry related to the universal service obligation and the reserved areas. It is right that those costs should be paid by the Post Office or any other licensed operator in the future.
I shall try to be helpful on costs. I have not had time to consult the Hansard reports of the Committee stage, but I did give some figures under the considerable hostile pressure of the Opposition. I have said that the cost of the commission is expected to be no more than £5 million and the cost of the consumer council is expected to be around £3 million. That is an increase on the cost of the present consumer body, the Post Office Users National Council, which costs about £1 million a year. However, although POUNC does a fine job on a shoestring, the new Consumer Council for Postal Services will invigorate the approach to consumer issues.
The arrangements are no different from those in place for the other regulatory bodies. We have given examples of the costs, and I remind the hon. Gentleman that clause 60 requires that both the commission and the council publish a forward work plan every year. That plan will include details of their projected costs, thus aiding transparency and scrutiny.
The projected costs are very modest, and it is right that the regulated should pay for regulation. I hope that the House will accept new clause 2 and the associated technical amendments.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 3

APPLICATION OF CUSTOMS AND EXCISE ENACTMENTS TO CERTAIN POSTAL PACKETS

'.—(1) Subject as follows, the enactments for the time being in force in relation to customs or excise shall apply in relation to goods contained in postal packets to which this section applies which are brought into or sent out of the United Kingdom by post from or to any place outside the United Kingdom as they apply in relation to goods otherwise imported, exported or removed into or out of the United Kingdom from or to any such place.

(2) The Treasury, on the recommendation of the Commissioners of Customs and Excise and the Secretary of State, may make regulations for—

(a) specifying the postal packets to which this section applies,
(b) making modifications or exceptions in the application of the enactments mentioned in subsection (1) to such packets,
(c) enabling persons engaged in the business of a postal operator to perform for the purposes of those enactments and otherwise all or any of the duties of the importer, exporter or person removing the goods,
(d) carrying into effect any arrangement with the government or postal administration of any other country with respect to foreign postal packets,
(e) securing the observance of the enactments mentioned in subsection (1),
(f) without prejudice to any liability of any person under those enactments, punishing any contravention of the regulations.

(3) Duties (whether of customs or excise) charged on imported goods or other charges payable in respect of postal packets to which this section applies (whether payable to a postal operator or to any other foreign administration) may be recovered by the postal operator concerned as a civil debt due to him.

(4) In any proceedings for the recovery of any charges payable as mentioned in subsection (3), a certificate of the postal operator concerned of the amount of the charges shall be evidence (and, in Scotland, sufficient evidence) of that fact.

(5) In this section "foreign postal packet" means any postal packet either posted in the United Kingdom and sent to a place outside the United Kingdom, or posted in a place outside the United Kingdom and sent to a place within the United Kingdom, or in transit through the United Kingdom to a place outside the United Kingdom.'.—[Mr. Alan Johnson.]

Brought up, and read the First time.

Mr. Alan Johnson: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government new clause 4—Power to detain postal packets containing contraband. 
New clause 6—Meaning of "reasonable excuse"—
'In sections 81 and 82 "reasonable excuse" includes intentionally delaying or opening a postal packet in the course of its transmission by post—

(a) pursuant to a request from any constable or the Commissioners of Customs and Excise, or
(b) if a person reasonably suspects that the postal packet contains goods which may be illegal.'.
Government amendments Nos. 36 to 41, 43 and 52.

Mr. Johnson: These amendments bring up to date the Customs and Excise powers contained in sections 16 and 17 of the Post Office Act 1953. They are intended to maintain the powers of Customs and Excise with regard to mail being imported and exported from the UK. The powers have been updated to reflect the modern postal services environment.
New clause 3 maintains the neutrality of Customs provisions while permitting application to all postal operators under the new regime. It replaces section 16 of the 1953 Act, which applies customs legislation to postal packets, and provides a power, similar to the one in the 1953 Act, for the Treasury to make regulations specifying how the legislation should apply. It also allows duties and charges applied through this clause to be recovered by the postal operator concerned.
New clause 4 replaces section 17 of the 1953 Act. It permits postal operators to detain, and forward to Customs and Excise commissioners, any postal packet they suspect contains goods on which duty has not been paid, or the import or export of which is prohibited or restricted. Under the new clause, Customs and Excise commissioners may open and examine any postal packet forwarded to them in the presence of the addressee, or, in specified circumstances, in the addressee's absence. If the commissioners find any goods that are prohibited or on which duty has been not peen paid, they may take proceedings in relation to them. If, upon opening, the commissioners do not find any such goods, they must forward or deliver the package to the addressee.
The Government believe that it is vital that Customs and Excise is allowed to continue its important work in policing the post and that it continues to have appropriate powers. The amendments simply ensure that it will continue to have the powers that it needs to carry out its functions and duties in respect of the import and export of postal packets.
Amendments Nos. 36, 37 and 38 provide that the Customs and Excise powers included in new clauses 3 and 4 are not bound by the provisions in clause 93 that relate to the inviolability of mail. Therefore, Customs powers will continue to be exempt, as they are now. The procedures in the Bill reflect exactly what has been in force for the past 47 years. These amendments replace the references to sections 16 and 17 of the 1953 Act in the current draft of the Bill with references to the new clauses.
8.15 pm
Amendments Nos. 39, 40, 41, 43 and 52 relate to how the power of the Treasury to make regulations under new clause 3 is exercisable—by statutory instrument, in the same way as other powers in the Bill under clause 109. This power will be subject to the negative resolution procedure in the House of Commons.
I commend the new clause to the House.

Mr. Page: For a brief moment, I wondered whether to embark on a war of attrition to see whether the Minister would keep going all evening or retire hurt—in which case he might end up in the same recovery bay as my hon. Friend the Member for Rutland and Melton (Mr. Duncan).
New clause 3 seems straightforward enough—it will place on postal operators the obligation of meeting the dues on postal packets imported into, or exported from, the United Kingdom. In addition, they will be required to put into effect any arrangements reached with the Governments or postal operators of other countries with respect to foreign postal packets.
It is characteristic of this Government that operators will be able to recover any duties charged by Customs and Excise on imported goods as a civil debt. The Government seem almost obsessed with transferring administrative responsibilities to the private sector without meeting the costs involved. There is a huge temptation for me to speak about the problems facing small businesses; however, that would not be in order.
The clause contains nothing to compensate postal operators for the costs incurred in meeting their obligations—no doubt their customers will pay more to cover those expenses. That is a convenient arrangement for the Government. They claim to be the friend of business, but in fact they are for ever adding to the burdens faced by business organisations.
New clause 6 was first moved in Committee, and the Minister gave several commitments that he would consider it again. Obviously, if he is prepared to accept it now, I should be delighted. I would sit down and waste no more time, but I see that he is shaking his head and so I must go into some detail. No doubt his severe cold is restraining his natural generosity of spirit, but I feel honour bound to repeat some of the points made in Committee. [Interruption.] The hon. Member for Stroud (Mr. Drew) groans from a sedentary position, but the problem is not with me—it is with the Minister, who indicated in Committee that, after a bit of redrafting, the new clause could be greeted with enthusiasm. That redrafting has not materialised, so new clause 6 is making a reappearance.

Mr. Bercow: I look forward with enthusiasm to hearing the arguments for new clause 6 for the first time,


as I did not have the inestimable privilege of being a member of the Standing Committee considering the Bill. I therefore did not hear my hon. Friend's eloquent advocacy in the first instance.

Mr. Page: My hon. Friend encourages me to go even further. I was merely going to touch briefly on the salient points, but I now feel constrained to go into the arguments in greater depth. The Minister may be starting to feel that he should have pushed a little harder on new clause 6, thus saving both of us time at the Dispatch Box.
The new clause is the same as that tabled in Committee. Again, it refers to our old friend "reasonable". I am sorry that the hon. Member for Weston-super-Mare (Mr. Cotter) is not here, because he also has an enthusiasm for "reasonable". I had hoped that he would be here to reinforce my argument. I would have welcomed his support on such an issue, but we will have to plod on without him and make the best of it.
The Bill does not provide a clear definition of what might constitute a breach of duty, and thus an offence, by any person engaged in the business of a postal operator if, without reasonable excuse, he intentionally delays or opens a postal packet in the course of its transmission. Similarly, a person other than a postal operator who, without reasonable excuse, intentionally delays or opens a postal packet in the course of its transmission will also be guilty of an offence. A person opening a postal packet that is incorrectly delivered to him with the intention of acting to mother's detriment and without reasonable excuse is also guilty of an offence. The purpose of the new clause is to draw out exactly how the Minister intends the various provisions to operate. Unless the new clause is accepted, the Bill remains unclear.
Sections 58 and 68 of the Post Office Act 1953 make it an offence, punishable by a fine and imprisonment for employees of the Post Office wilfully to delay or omit to deliver packets and messages, and for any person to solicit or endeavour to procure another person to commit such an offence. The problem is that the Bill offers no guidance as to what is a reasonable excuse. It is possible, if not probable, that the definition of that term will depend on decisions in court. Barristers and solicitors would no doubt welcome this source of employment. However, we should ensure that the legislation is as clear and transparent as possible so that people do not have to go to the courts for an interpretation. I believe that it is our duty to make the legislation as clear and transparent as possible. To push a measure through because it is convenient and easy is not the right option.
In Committee, we asked whether the wording of our new clause would permit trade unions in pursuit of industrial or political objectives to attempt to delay the transmission of postal packets. My hon. Friend the Member for Buckingham (Mr. Bercow) will be delighted to know that I suggested that the Minister would remember from his previous employment that the then Union of Post Office Workers attempted to stop the handling of mail to South Africa because it disagreed with the South African Government's politics at the time. Would that reason constitute a reasonable excuse?
The advantage of our new clause is that it would make requests from the police and Customs and Excise for delays to the transmission of postal packets or for the opening of them a sufficient defence for the offences listed in the Bill. The new clause would also offer a complete defence with regard to postal packets that contained goods in defiance of the law.
The Minister said in Committee that he would be prepared to consider the new clause. He has not done so—I am sure that that is an oversight, caused by his temporary illness. He has not been able to focus on the matter in the way in which he should have done. I mean no criticism in saying that. In the spirit of friendship, which is part of my natural wont as I go through life, I am fully prepared to admit that the drafting of the clause is not perfect. It could be honed and polished to a greater sophistication.

Mr. Bercow: I suppose that I ought to come clean—there is another reason for my concern about this matter. Fourteen years ago, as my hon. Friend is probably unaware, I was threatened with the non-distribution of my internal mail when I was a member of Lambeth borough council on the ground that the public service union concerned deprecated my political views. Does my hon. Friend agree that that should certainly not be a basis for non-distribution of mail?

Mr. Page: My hon. Friend is right that I had no idea that he was threatened by the draconian sanction of not receiving his mail through the internal postal system of the council on which he served. I am not sure whether the internal system was being run by the Post Office at the time, and whether there was a responsibility that would come under the aegis of the Bill.
As I was about to say before my hon. Friend's intervention, I am prepared to accept that the new clause could be better presented, and I would be delighted to hear that the Minister is prepared to undertake that work.

Mr. Alan Johnson: The hon. Gentleman is quite right—we debated the new clause in Committee, and I would have been delighted to come to Report with the required amendment, because we need one. Unfortunately, it has not proved possible to accept new clause 6 at this stage, partly because of the complex new issue of what defines "reasonable excuse". We have solved the problem that we set out to solve, which was that since the time of Queen Anne, under successive Post Office Acts it has been an offence wilfully to delay the mail. Wilful delay of the mail carried no excuse—there were no criteria as to whether that action could have proved reasonable. Therefore, an awful lot of problems occurred with wilful delay of the mail. Indeed, in the very incident to which the hon. Gentleman referred, when the Union of Post Office Workers took industrial action against the despicable regime of apartheid in South Africa, a judge at the time ruled that the wilful delay provision, which was originally put in place to deal with highwaymen, would be used as a reason why the union should not have the right to go on strike. I see that the hon. Member for Buckingham (Mr. Bercow) agrees with that.


There were problems with the phrase "wilful delay", and the phrase "reasonable excuse" was believed to be a way around them. I apologise for not having the amendment ready at this stage. We will have to do it in another place, and I very much hope that it will meet all the concerns that have been raised.
New clause 6 does not solve the problem. As we discussed in Committee, it would create enormous problems if people could open mail if they reasonably suspected that a postal packet contained goods that may be illegal. The inviolability of mail is a major part of the Bill and one can imagine the problems in a court of law if people could breach that inviolability because they suspected that a packet might contain something illegal, for whatever spurious reasons. I understand that the hon. Member for South-West Hertfordshire (Mr. Page) is trying to resolve a difficulty that we want to resolve.

Mr. Bercow: I understand where the Minister is coming from. The new clause is as much as anything a probing motion. It is entirely reasonable for him to cavil at the idea that someone might tamper with mail on the basis of suspicion, but would he agree that demonstrable reason to believe might be a justification?

Mr. Johnson: That is one of the matters that we are examining. We must do so in the context of other legislation that is passing through the House and the universal declaration of human rights. Complications are coming from other areas. However, the hon. Gentleman has raised a valid point, which we shall explore with the aim of dealing with it by introducing an amendment in another place.

Mr. Brady: I seek clarification of one point that has arisen during this short exchange. Will the Minister make it clear that when the Government bring forward their amendment or new clause, it will not be considered reasonable for a trade union or any other body to decide on political grounds whether mail should be allowed to go to one country or another or one company or another, however despicable the regime might be? Does the Minister agree that it is unacceptable for trade unions or other bodies to interfere with the mail?

Mr. Johnson: I think that that issue was dealt with in a piece of legislation in 1981. The action to which reference has been made took place in 1978, and I do not regard it as being part of the Bill. Perhaps employment relations legislation is the right area in which to raise it.
I hope that the hon. Member for South-West Hertfordshire will feel able to withdraw the new clause on the basis of my comments.

Mr. Page: In the spirit of co-operation, and bearing in mind the Minister's poor health, I shall not press him any further at this stage. However, I look forward to him introducing—this will be the third time of asking—a suitable amendment in another place that will address a serious problem. The amendment should be inserted in the Bill, rather than leaving the matter to the courts to try to find a solution.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 4

POWER TO DETAIN POSTAL PACKETS CONTAINING CONTRABAND

'.—(1) A postal operator may—

(a) detain any postal packet if he suspects that it may contain relevant goods,
(b) forward any packet so detained to the Commissioners of Customs and Excise.

(2) In this section "relevant goods" means—

(a) any goods chargeable with any duty charged on imported goods (whether a customs or an excise duty) which has not been paid or secured, or,
(b) any goods in the course of importation, exportation or removal into or out of the United Kingdom contrary to any prohibition or restriction for the time being in force by virtue of any enactment.

(3) Subsection (1) is without prejudice to section (Application of customs and excise enactments to certain postal packets).

(4) The Commissioners may open and examine any postal packet forwarded to them under this section—

(a) in the presence of the person to whom the packet is addressed, or
(b) where the address on the packet is outside the United Kingdom or where subsection (5) applies, in the absence of that person.

(5) This subsection applies where—
(a) the Commissioners have—
(i) left at the address on the packet notice requiring the attendance of the person concerned, or
(ii) forwarded such notice by post to that address, and

(b) the addressee fails to attend.

(6) If the Commissioners find any relevant goods on opening and examining a postal packet under this section, they may detain the packet and its contents for the purpose of taking proceedings in relation to them.

(7) If the Commissioners do not find any relevant goods on opening and examining a postal packet under this section, they shall—

(a) deliver the packet to the addressee upon his paying any postage and other sums chargeable on it, or
(b) if he is absent, forward the packet to him by post.'.—[Mr. Byers.]

Brought up, read the First and Second time, and added to the Bill.

New Clause 5

TAX

'. Schedule (Transfer to the Post Office company: tax) (taxation provisions in relation to the transfer to the Post Office company) shall have effect.'.—[Mr. Byers.]

Brought up, and read the First time.

Mr. Byers: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Alan Haselhurst): With this it will be convenient to discuss the following: Government new schedule 1—Transfer to the Post Office Company: Tax—
Government amendments Nos. 49 to 51 and 54.

Mr. Byers: This is a group of technical amendments that make the transfer of property rights and liabilities from the Post Office to the Post Office Company tax neutral.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

Clause 7

EXCEPTIONS FROM SECTION 6

Mr. Page: I beg to move amendment No. 60, in page 4, line 36, leave out "£1" and insert "50p".

Mr. Deputy Speaker: With this it will be convenient to discuss the following amendments: No. 61, in page 4, line 38, leave out "350" and insert "150".
No. 62, in clause 13, page 9, line 9, at end insert—
'(2A) The provisions of a licence to be held by a universal service provider shall—

(a) require—
(i) the keeping of separate accounts for each of the postal services which may not be provided unless the licence is held and any other postal services, and
(ii) the accounts for any other postal services clearly to distinguish between services which are part of a universal postal service and services which are not; and
(b) prohibit cross-subsidies between the postal services which may not be provided unless the licence is held and any other postal services which are not part of a universal postal service.'.
No. 64, in clause 15, page 10, line 11, leave out "may" and insert "shall".
No. 65, in page 10, line 11, after second "Commission", insert "every three years".
No. 66, in page 10, line 14, leave out—
', which are specified in the reference and'.
No. 67, in page 10, line 15, after "of', insert "a universal".
No. 68, in page 10, line 15, leave out "services" and insert "service".
No. 69, in page 10, line 43, at end insert—
'except for references under subsection (1) above.'
No. 72, in clause 43, page 28, line 13, at end insert—
'(1A) In performing its duty under subsection (1)(a) the Commission shall compare annually the efficiency and economy in the provision of postal services by licence holders with the provision (in the United Kingdom and elsewhere) of postal services and other delivery services.'.
No. 73, in clause 44, page 29, line 2, at end insert—
'( ) a report on the findings which arise from the performance by the Commission of its duties under section 43(1)(a).'

Mr. Page: Since the publication of the Government's White Paper on the future of the Post Office last summer, on Second Reading and in Committee, Ministers have advanced the argument that the present Administration wish to press ahead with liberalisation. They want to open up the area within which the Post Office's current monopoly operates.1 and my right hon. and hon. Friends share that ambition. Now is the Minister's opportunity to take a step towards opening up the Post Office and liberalising its operation.
Unfortunately, the wish to go down the path of liberalisation is not shared by some of those right hon. and hon. Members who sit behind the Minister or by some of their trade union allies. It took only a suggestion in the

White Paper last year that the price of letters falling within the Post Office monopoly might be halved from £1 to 50p to cause those shadowy union figures who exercise so much influence over new Labour, as they did over old Labour, to become alarmed.
When the Government placed an advertisement in The Sunday Times for the post of chairman of the proposed Postal Services Commission in mid-September, they clearly specified the need for greater competition in the postal services market. The first major step towards liberalisation was to be taken with the reduction from £1 to 50p of letters falling within the monopoly on 1 April 2000.
I want to give the Government every credit for their stout defence against the forces that were mobilised against that change. Having laid their statutory instrument before the House to introduce it, Ministers held out for at least two or three weeks before doing a U-turn. Old Labour pulled the strings and the Government did what they almost always do when faced with opposition within their ranks: they rolled over and surrendered.
It is pointless for the Minister to say by way of explanation that the Government were persuaded to back-track because of their plans based on the report of the Select Committee on Trade and Industry last September. The entire House has tremendous respect for that Committee. I do not believe that the Government should be involved in consultation on the appointment of members of the Postal Services Commission. It is more than a bit rich for Ministers to regard the Select Committee as an authority whose advice must be followed on the scope of the Post Office monopoly when, in their view, it is not well qualified to take a view on the composition of the members of the commission, which will be responsible for determining the limit once the Bill is enacted.
The Government have already made the case for reducing the limit to 50p, but they have had a temporary moment of weakness. I hope that my amendment will encourage them to return to their previous position. The Government rightly recognised last summer and autumn that the Post Office would inevitably be exposed to greater competition in its current monopoly area. As night follows day, international competition will grow and pressures will build. The Government were conscious that the sooner the process of adjusting to greater competition began, the better the prospects for the Post Office, and I endorse that view.
I invite the Government to have the courage of their own convictions and not to leave the decision to reduce the limit to the Postal Services Commission. Promoting competition must be more than a slogan, a soundbite or mere spin. When the Government say something, they must mean it and stick by it, but we must doubt whether that will be so. They paid lip service to competition for only as long as the occupants of smoke-filled back rooms did not kick up any fuss. They should kick the habit, give up smoking and bring the Post Office into the real world and the clean, fresh air of competition.

Mr. Bercow: Does my hon. Friend agree that his salutary amendment puts the Minister for Competitiveness under the spotlight and to the test? We shall listen with interest to the Minister's reply. The Secretary of State has made consistent pro-competition noises and has made


considerable progress in his political career not by submitting to, but by taking on, the trade unions. I fear, however, that the suspicion lurks that the Minister for Competitiveness, whose background is in organised labour, may be a little unsound and may have sought to dissuade the Secretary of State from his previous intention. Must we not be assured that the Minister is on-side?

Mr. Page: There is greater joy in heaven over the prodigal that returns than over the person who remained constant all the time. I have always felt it very unfair that the person in the parable who played the game and did all the work got no credit when the rogue and the vagabond who squandered the family inheritance was welcomed back and the fatted calf was killed for him. Nevertheless, I am of a generous nature, as I keep telling the House, although no one believes me. If the Minister were to announce that he had forsaken his old ways and was coming back to the paths of righteousness and competition, I should be the first to pay tribute to his conversion.
Our raft of amendments flows towards the same point—increased competition. Amendment No. 61 would reduce the weight from 350 g to 150 g. The arguments in favour of reducing the weight limit over which the Post Office retains a, monopoly are just as cogent as those for reducing the price at which the monopoly is effective. The Government argued for that only last year, but, as on price, they have retreated in the face of their trade union allies. I have to assume that that explains the unusually coy terms in which the Minister referred to the proposals in the 1999 White Paper and the abortive statutory instrument subsequently laid before a Standing Committee on 9 March.
I realise that that point is embarrassing for Ministers, who are understandably sensitive. I do not want to highlight it too greatly, but, as Oscar Wilde, I think, once said, there is a good deal to be said for blushing if one can do it at the proper time. The Minister should occasionally blush when he thinks over the saga of embarrassment within his Department.
If it was right to argue last year for a reduction in the weight limit, it remains right today. The longer the Post Office is shielded from serious competition within its monopoly area, the greater its difficulties will be when it has to face rival operators in the previously protected areas. That competition cannot be avoided for ever. It will come, no matter what the Government may say or do to try to prevent it.
We have seen what happened as regards job losses and plant closures as a result of the Department of Trade and Industry's failure to anticipate what was happening in areas such as the Rover car company. When the Post Office suddenly starts to shed jobs because it has been exposed to market competition, we shall no doubt hear the Government trying to shield themselves by saying that wicked foreigners are not playing by the rules. They will say that the Postal Services Commission acted on its own precipitately to reduce the price and weight limits. The miracle cure of a task force will be wheeled out yet again to save the day.
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All that can be avoided if the Government accept the logic of their own arguments. The arguments that I have made were all previously advanced by the Government and would allow the Post office progressively to be exposed to further competition. It can adjust successfully to meet that competition and the Government would do well to give it that opportunity right now.
Amendment No. 62 is simple; it has one clear purpose—to ensure that the universal service provider keeps separate accounts for the services to be offered in respect of the licence to be held by that person or organisation, and for other postal services that might be supplied in the market. The amendment was tabled simply to prohibit the potential cross-subsidisation by a universal service provider of other postal services that lie outside its universal service.
The Government want a level playing field; they want fair play. What better way to achieve that aim than by accepting our amendment? Our concerns were prompted by the position of Parcelforce in the Post Office's operation. It has made losses over several years—far too many years, some people may say. It has been able to survive because it has been cross-subsidised by other operations in the Post Office monopoly. There is no doubt that its commercial rivals have suffered as a result, because they have not had the advantages of protection to sustain loss-making activities. The phrase "level playing field" is a terrible one, but everyone knows what it means; it is vital that we have one so that that situation does not continue after the Bill is passed.
I do not know how the Minister will react to the amendment, although I can make a strong guess. The Government made their position clear on the other amendments that I tabled—I am now offering them a little backbone, so that they can make progress. I suspect that they might be reluctant to accept the amendment, for fear of offending the Communication Workers Union. They may argue that it is for the Post Office to arrange its commercial affairs in the competitive environment into which it is being thrust.
Why tie the Post Office down with such restrictions? Why does the Minister not go ahead and give the organisation a fair and open trading position so that everyone knows exactly where they stand?
I make no apology for pointing out that amendments Nos. 64 to 69 are among the most important to be tabled by my right hon. and hon. Friends. They constitute a critical test of the Government's commitment to the process of competition. At present, clause 15 permits the Postal Services Commission to request the Competition Commission to investigate practices that may act, or may be expected to act, against the public interest and to report on whether modifications to the licence conditions might produce appropriate remedies. It also offers the Postal Services Commission latitude to vary the terms of reference to the Competition Commission and to advance its own view on the nature of any potentially adverse effects of licence modifications on dealing with such problems.
Furthermore, the Secretary of State may step in—as one might expect, because he appears either directly, or as some shadowy figure, behind most of the Bill—to
direct the Competition Commission not to proceed
with any reference to it, nor "to give effect" to any variation of the terms of reference previously made by the Postal Services Commission.
The permissive nature of these provisions—the opportunities that the Postal Services Commission will have to decide whether to make a reference to the Competition Commission and to alter the terms of the reference once made, quite apart from the ability of the Secretary of State to cut short any investigation—seems strongly at variance with the Government's declared aims of promoting competition and preventing anti-competitive practices.
My speech may be becoming a little too biblical, but I was going to say that that variance reminds me of the sinner who wanted to be virtuous but preferred not to be just yet—and we all remember the story of the maiden lady saying her prayers. [Interruption.] If the Minister does not know the story, I shall tell him afterwards and let him into the secret. It is not terribly scandalous.
The amendments in my name and that of my hon. Friend the hors de combat Member for Rutland and Melton (Mr. Duncan) have a single purpose: to ensure that the Postal Services Commission is obliged to refer the activities of universal service providers to the Competition Commission every three years for a determination of whether they operate in the public interest. I do not believe that regular examination of the Post Office's activities will do it any harm if it is working in the overall public interest. It would be seen not to have indulged in any anti-competitive practices. Only those who have something to hide will seek to object.
However, I expect that the Minister will tell me that the licence conditions under which the Post Office is expected to operate will ensure that it does not conduct its activities in an anti-competitive way. I have no doubt that we shall be told that the universal service providers, whether one or many, will be subject to competition law. So they will, and so they should be.
The trouble with that view is that it does not take into account the way in which monopolies operate. We need to be sure that the Post Office will be properly controlled and its activities regularly scrutinised. I am worried that the regulator alone cannot do that task.
The relationship between a powerful monopoly and its statutory regulator is complex and full of tensions. I served on the Committee that considered what became the Telecommunications Act 1984, which split telecoms from the Post Office and then privatised them, so I am fully aware of how tensions can move into a relationship between regulator and monopoly. The relationship resembles a marriage. Both partners need each other and cannot live apart, but there is a tendency for them to bicker constantly. That was certainly true of BT and Oftel for the first few years of their dealings with each other.
The one thing that the arrangements for the external scrutiny proposed in clause 15 do not offer is the periodic appearance of a marriage guidance counsellor. Amendments Nos. 64 to 69 address that issue and close

that gap. It will help if an independent person studies the relationship periodically to ensure that it is fair and that there is fair play on both sides. I believe that that would ensure that the relationship between the Postal Services Commission and the industry that it regulates does not become too close—that there is no possibility of excessive familiarity between partners in that relationship.
We all know the problems that can exist when hostages are taken, and the relationship between kidnapper and hostage becomes close and ceases to be antagonistic. Sometimes hostages go out of their way to protect the kidnapper. I know that I am now making a slightly broader parallel, but I believe that our suggestions would prevent excessive familiarity between the partners in that relationship. As a result, the Competition Commission could take a dispassionate look at the postal services industry's licence holders regularly but not too frequently.

Mr. Bercow: Would my hon. Friend like to say something about paragraph (b) of amendment No. 62, tabled in his name and that of my hon. Friend the Member for Rutland and Melton (Mr. Duncan)? That amendment seems eminently reasonable, and I will be genuinely perplexed if Ministers do not support it. Can my hon. Friend enlighten me?

Mr. Page: I have always had great difficulty in grasping why Ministers do not support my amendments, because I have always thought all those amendments, both here and in Committee, to be eminently reasonable and practicable in helping the Post Office and the whole postal industry to provide a better service in the very competitive world outside.

Dr. George Turner: rose—

Mr. Page: The hon. Gentleman must hold his horses as I gallop to the end of my sentence.
It amazes me that the Minister has not accepted our amendments. But I am being very kind to him today, because he is obviously under the weather. He is not well, and he is struggling to get through, so I shall not push too many of my amendments to what should be their logical conclusion.

Dr. Turner: I should like to take the opportunity to congratulate the hon. Gentleman on at least realising the wisdom of withdrawing the amendment he moved in Committee that would have halved the weight of the parcels participating in the universal service. It seems that he does not, on reflection, think that all the amendments he moved in Committee were sensible, and I congratulate him.

Mr. Page: I am always open to congratulations. Flattery, rather than kicks, gets people further in the world. But it will come as a huge surprise to the hon. Gentleman that not every amendment that one tables is selected for debate. There were a number of amendments that we would have liked to table, but did not, because we did not believe that they would be selected. I must express appreciation to the powers that be that have allowed these amendments to be given another run around the course. I hope that this time the Minister will stiffen his backbone, take his courage in both hands, act in accordance with all the other metaphors and similes that I can think of, and accept them.


I shall say no more about that amendment and draw my remarks to a close by saying a few words about amendment No. 73.
The amendments that we are considering arise from issues that both I and my hon. Friend the Member for Rutland and Melton raised in Committee. We argued then, and on my hon. Friend's behalf I argue again now, that it would be appropriate for the regulatory body to collect information about the development of postal services within the rest of Europe and about the performance of the postal service providers there
If my memory serves me correctly, the Minister broadly agreed that that would be sensible. I do not want to say "desirable", but when we discussed the matter he seemed to express some enthusiasm. I am sorry to say that his apparent generosity on that occasion does not appear to have been translated into action.
My hon. Friend indicated that we would raise the matter again on Report if there was no response, or an inadequate response, by the Department. That explains why I am returning to the matter now. I hope that the Minister will think again about the small burst of enthusiasm for this measure that he expressed in Committee and consider whether he feels like accepting it now.
As I said, this clutch of amendments would gear up the Post Office to face a competitive world that will become even more competitive. Fairly soon, there will be pressures from Europe on our postal services and on the Royal Mail. The quicker that we start to adjust to them and to prepare for them, the better.

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Mr. Cotter: As the hon. Member for North-West Norfolk (Dr. Turner) said, Conservative Members attempted in Committee to hit severely at the universal service. They have possibly since taken fright at that, because we are dealing with a serious issue. Communities are at risk and people expect and are entitled to expect a good service. We have had a universal service for many years. However, as the hon. Gentleman pointed out, one form of amendment was tabled in Committee but the hon. Member for South West Hertfordshire (Mr. Page) has made another attempt to attack the universal service and that is linked to the reduction in the limit from £1 to 50p.
I do not understand the purpose of the amendment. An attack on the universal service would affect people across the country. Under the Bill, the regulator has an obligation to consider this issue, and I would much prefer his considered view to this amendment.
Serious issues are involved. The £1 limit has been in place for many years, and has effectively reduced in value. Competition from e-mail and other services is another factor, and if the limit were reduced the estimated loss of income to the Post Office would be about £100 million. In addition, people in rural areas would suffer a diminution in their service.
If, in due course, the regulator examines the issues that I have raised and comes to the conclusion, after careful consideration, that the proposal in the amendment is a way forward, it will be a different story. The regulator will have considered the issues properly and taken into account the position as it will be after the Bill has been enacted. That is preferable to accepting the amendment

tonight. I look forward to the Minister's response. Instead of taking the precipitate action proposed in the amendment, we should consider carefully any suggestion that might affect the universal service.

Mr. Alan Johnson: The hon. Member for South West Hertfordshire (Mr. Page) mentioned prodigal sons, broken marriages and kidnapping. I thought that he was devising a Jeffrey Archer plot rather than considering the Postal Services Bill.
Amendments Nos. 60 and 61 contain arguments that are so stale that they are curling at the edges. We debated the matter in the House on 8 December on a revocation order and we debated it again in Committee. I very much appreciate the remarks of the hon. Member for Weston-super-Mare (Mr. Cotter), but I remind him that he moved an amendment in Committee to bring down the £1 monopoly limit to 50p. It was forced to a vote and he voted against his own amendment.

Mr. Cotter: As the Minister knows very well, we were trying to probe a point and he has misrepresented me very badly. On that occasion, he accused me of being mischievous, so I accuse him of being equally mischievous tonight.

Mr. Johnson: The hon. Gentleman may well be right.
Our argument is simple. The Trade and Industry Committee report suggested that instead of taking the drastic step of halving the monopoly at the very time we are setting up the Postal Services Commission, it would make sense, as the hon. Gentleman said, for us to ask the commission to do the necessary work. It should also make the judgment not whether to reduce the monopoly level to 50p but whether to reduce it at all, and if so by how much. That argument is perfectly defensible.
On that basis, the Conservatives have accused us of delay. Their manifesto for the 1992 election, which they won—it will probably be their last election win for many a year—contained a commitment to introduce a regulator and reduce the monopoly limit to a level closer to the price of a first-class stamp. The party that is so keen on competition and regulation did absolutely nothing about those manifesto commitments, which many hon. Members on both sides of the House would have supported. Instead, it went off on a wild adventure of privatisation. If one sprinkled the Conservatives' manifesto with rosewater, held it up to the light and looked at it from every angle, one would find no reference to privatisation.
We are having to wait a few months for the commission to be set up and, perhaps, for the monopoly limit to be reduced. We agreed that the limit should be sufficient only to guarantee universal service at a uniform tariff. That is the principal objective that we have given the commission. As to the wait, I can only say to the hon. Member for South-West Hertfordshire that under the previous Government we waited five years and there was no movement at all.
It was timely of my hon. Friend the Member for North-West Norfolk (Dr. Turner) to point out that Conservative Members, who say that they are defending the universal service obligation, tabled an amendment in Committee which would have allowed parcels to be delivered in remote rural areas outside the terms of the universal service obligation. That would particularly have affected


parts of Scotland such as the highlands and islands, where the Conservatives have no parliamentary representation. They have met Disraeli's great objective of being a one nation party: they have no Members in Wales or Scotland; they have Members only in England.
That amendment would have meant that the Post Office would no longer have a commitment to deliver to those areas, and if it did so, it could charge a higher tariff for going to the far north or to remote rural areas. We should remember that proposal the next time the Conservatives start banging on about how devoted they are to the universal service obligation. The Opposition's arguments are stale and we have debated them in the House before. I hope that the hon. Gentleman will have the sense not to press amendments Nos. 60 and 61 to a vote, but, if he does, I hope that they will be defeated.
I cannot be much kinder about amendment No. 62, which thuds along heavily like a dinosaur through the Bill's lush terrain. We have debated the matter before. It is our intention that the requirements on universal service providers—such as quality of service standards, regulatory accounts, complaints and compensation schemes—will be imposed and enforced through the licensing regime. The outline licence has been distributed and comments are invited until September. All contributions will be gratefully received. Such matters should be dealt with in that manner, not in the Bill. We are setting up a commission, and we ought to allow it to decide how to do its work.
The hon. Member for Buckingham (Mr. Bercow) is not in his place, but he was seized by new subsection (2A)(b) in the amendment, which refers to cross-subsidies. That matter is decided by the European postal directive, which will bring him no comfort. The directive allows cross-subsidy from the reserved to the non-reserved area, provided that it is necessary to maintain a universal service, so parcels, for example, can be cross-subsidised in certain circumstances. That is why the amendment should not be pressed.
I can be a little kinder about amendments Nos. 64 to 69, which at least show a little originality. However, if I have understood their purpose correctly, it rather stands on its head the amendment that we introduced in Committee to give the Postal Services Commission the ability to refer to the Competition Commission any matters on which it considered that there was a conflict with public interest. Under the Bill as amended, the Postal Services Commission will have that important power to protect the public interest, and we need no further amendments to that effect.
Finally, on amendments Nos. 72 and 73, perhaps I am becoming a little more mellow. The amendments would create a specific duty, requiring the commission to compare annually the efficiency and economy of postal services provided by licence holders to postal services in general, in the UK and elsewhere.
The problem is that that is an unnecessary level of prescription. It specifies exactly how the commission should carry out its duties. We think that that should be left to the commission. It suggests that the commission should carry out benchmarking annually. The commission can decide on the importance of benchmarking and

whether it should be done annually, biennially or whenever. It is ridiculous for the Bill to be prescriptive on such issues.
In addition, the amendment specifies that the commission should carry out its work to an arbitrary time scale, which once again is not helpful.
We have said many times that our intention in the Bill is to set up an independent regulator. The Bill sets out the main functions, duties and powers of the commission, but it does not tell the commission how to fulfil those functions. That is for the commission to decide; otherwise it would not be a fully independent body. The amendment goes against the concept of the independent regulator. I therefore hope that the hon. Member for South West Hertfordshire will withdraw it.

Mr. Page: I thank the Minister for his comprehensive response to the amendments that my hon. Friend the Member for Rutland and Melton (Mr. Duncan) and I submitted.
I thought that the Minister was remarkably cruel to the hon. Member for Weston-super-Mare (Mr. Cotter). He should remember that the hon. Gentleman represents a party that is the Government's ally in Scotland. I find it slightly hurtful that the Minister should so thoroughly humiliate the hon. Gentleman in the Chamber. I suggest that, in future, the Minister should adopt the approach of forgiving the hon. Gentleman because he knoweth not what he does.
We all know that when the Government are in trouble, they start harking back to the past, going back to the previous Government and history, when they should be looking to the future. The plain fact is that a year ago, the Government announced their intention to introduce certain reductions of the limits, and within a week or so, under a little pressure, they collapsed and caved in. Now the Minister is trying to get the commission to do the Government's work for them. I find that unsatisfactory. In his position, I would find it highly embarrassing. Nevertheless, in the circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Alan Johnson: I beg to move amendment No. 30, in page 5, line 35, leave out from "letters" to end of line 39 and insert—
'of members of a document exchange from a departure facility for that exchange to an arrival facility for another document exchange by persons who are not members of either exchange, and the collection and delivery by such persons for that purpose of letters delivered to the departure facility concerned,'.

Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 31 to 33, 19 to 22, 47, 23 to 29 and 53.

Mr. Johnson: In view of the time and my cold, I shall be brief. The amendments are technical and deal with matters such as petitions to the National Assembly for Wales. Hon. Members who served on the Committee may remember that we gave a commitment to introduce relevant amendments on Report.
I shall spend a couple of minutes on certain aspects of amendments Nos. 30 to 33, which deal with document exchange centres. I need to put on record the reasoning behind the amendments.
9.15 pm
We have a general policy of replacing the system of class licences with exceptions to clause 6. Document exchange is currently subject to a class licence, and including this exception in the Bill will allow a useful service to continue. Document exchange is a system used by many professionals, such as lawyers and insurers, who are members of a local document exchange to exchange documents with other members of that local document exchange. We have already defined such an exchange in the Bill as a system involving at least three members for each local document exchange, in order to ensure that this does not become an end-to-end service breaching the reserved area without a licence.
Similar institutions exist in Europe, but they are not common. In the United Kingdom, the system has developed almost uniquely to include the conveyance and sorting of letters between document exchanges, with the result that a national network linking document exchanges has evolved.
The amendment makes it clear that the exception allows for the conveyance of letters between document exchanges by a third party. We have now defined that more closely as transport between the departure facility of one document exchange and conveyance to the arrival facility of another document exchange. What the exception is not intended to do is permit end-to-end delivery by a third party. That would allow cream-skimming: it would allow unlicensed operators to jeopardise the universal service at a uniform tariff. To ensure that that does not happen, conveyance can occur only between the arrival and departure facilities of the document exchange, not within the document exchange. The letters being conveyed must be intended for a document exchange other than the one from which they are being sent, and the third party providing the service must not be a member of either of the document exchanges concerned.
The members of any document exchange are responsible for the delivery and collection of their own letters. The amendment that we tabled earlier inadvertently left the slim possibility that a third party could take letters between the members within an exchange. Although the possibility was only slim, we could see that the loophole could have been exploited to create a rival end-to-end delivery system to a licensed universal service provider, but without having to obtain a licence from the commission. The amendment removes that possibility.
As of now, nothing in the amendment would prevent the arrival and departure facilities from being located on the premises of a member of the exchange, as is frequently the case in the United Kingdom—although the requirement for three members means that it would not be possible to establish a sham document exchange in which the only member was the person on whose premises the exchange was located.

Amendment agreed to.

Amendments made: No.31, in page 6, line 10, at end insert—
' "arrival facility", in relation to a document exchange, means any box, receptacle or other facility associated with that exchange which is provided for the receipt of letters from members of another document exchange

which are conveyed to the facility from a departure facility for that other exchange for collection by members of the first exchange,'.

No. 32, in page 7, line 2, at end insert—
' "departure facility", in relation to a document exchange, means any box, receptacle or other facility associated with that exchange which is provided for the collection of letters of members of that exchange which are delivered to the facility by those members for conveyance to an arrival facility for another document exchange for collection by members of that other exchange,'.

No. 33, in page 7, leave out lines 5 to 7.—[Mr. Betts.]

Clause 27

ENFORCEMENT ORDERS: FURTHER PROCEDURAL REQUIREMENTS

Mr. Alan Johnson: I beg to move amendment No. 1, in page 18, line 28, after "modifications", insert—
'and the Commission complies with the requirements of subsection (1A)'.

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 2 to 9.
Amendment No. 70, in clause 38, page 25, line 8, at end insert—
'and if a person objects to entry of anything in the register, he may appeal to the Secretary of State who may direct the Commission not to enter it.'.
Government amendments Nos. 10 to 14.
Amendment No. 74, in clause 53, page 33, line 41, at end insert—

'( ) The Council shall, in exercising its functions, have regard to the interests of—

(a) individuals who are disabled or chronically sick,
(b) individuals of pensionable age,
(c) individuals with low incomes,
(d) individuals residing in rural areas, and
(e) individuals who are homeless,
but that is not to be taken as implying that regard may not be had to the interests of other descriptions of persons.'.

Mr. Johnson: I hope that hon. Members will find our amendments uncontroversial, but I ask the House to resist amendments Nos. 70 and 74.
The main purpose of amendments Nos. 1 to 8 is to introduce the change that I promised the hon. Member for Weston-super-Mare (Mr. Cotter) when he withdrew a similar amendment in Committee. They will make sensible changes to the Bill. When the Postal Services Commission is able, under clause 27, to modify an enforcement order with the consent of the licence holder, it will now have to comply with the requirements of the new subsection that we are introducing. It will have to give notice of the proposed change to the Consumer Council for Postal Services, and must consider any representations that it makes. That will provide an additional chance for consumers' interests to be aired.
Amendments Nos. 6 and 7 are minor technical measures. They are simply a matter of common sense, requiring all relevant parties to be given notice of the commission's decisions. Amendment No. 9 is a small


consequential amendment to clause 38. It flows from the introduction of a licence modification procedure in Committee.
Amendments Nos. 10 and 11 to clause 43 tackle an anxiety that was raised in Committee by the hon. Member for Rutland and Melton (Mr. Duncan), who we hope is now sitting up and eating his Scotch broth. Clause 43 currently requires the commission to keep under review and collect information on postal services
in the United Kingdom and elsewhere…
We agree that other European Community states, which operate under the same directive, are likely to provide especially useful comparisons and that there is merit in amending the clause to emphasise the commission's role in collecting and keeping under review information on the provision of postal services in EC member states.
Amendments Nos. 12 to 14 deal with another anxiety that the hon. Member for Weston-super-Mare raised in Committee. Clause 53 currently specifies that the council must have regard to the views of users in different areas when carrying out its functions in relation to the relevant postal services. The purpose of the amendments is to clarify that the council, in exercising its functions, should consider the interests of the specified groups of individuals.
I understand that the reason for amendment No. 70 is to ensure adequate safeguards to protect the affairs of individuals. That is a worthy objective about which we agree. However, we believe that clause 38 sufficiently protects the rights of individuals.

Mr. Page: The Minister was brutal to the hon. Member for Weston-super-Mare (Mr. Cotter), but it was unnecessary to go over the top and try to accommodate him by tabling one or two minor amendments. If the Minister is going to be rude to someone, he should stick to that and not try to make amends in such a mealy-mouthed manner. If he tells me that crawling is successful, I am prepared to crawl to advance amendment No. 70. However, I have a strange feeling that, no matter how I abased myself, I would not gain the Minister's approval for the amendment.
Amendment No. 70 seeks to amend clause 38 to ensure that information about anyone's commercial interests is not entered on the register that is available for inspection by the public. It would also grant the right to raise with the Secretary of State an objection to an entry on the register. I cannot understand why an individual's justifiable right to such provisions should be resisted.
The current proposal for protecting confidential commercial information from disclosure on the register of licence is inadequate. It could discourage potential postal operators from applying for licences. The White Paper published in July 1999 and entitled "Post Office Reform: A world class service for the 21st century" was often cited in Committee. It dealt with the regulator's powers to publish information. Paragraph 32 on page 28 states:
The Regulator will have … a power to publish information for the benefit of consumers and in the interests of good regulation, subject to tests relating to substantial harm, including matters of commercial confidentiality and public interest.

The need to protect commercial interests was further acknowledged in the White Paper in relation to the Post Office's five-year strategic plan, which states:
The aim will be to report—
to Parliament—
once the Strategic Plan has been approved.
That need was also acknowledged in the 12th report of the Select Committee on Trade and Industry, which considered major acquisitions by the Post Office. The report states:
We recommend the greatest possible degree of transparency compatible with genuine requirements of commercial confidentiality on this and future major purchases by the Post Office.
Amendment No. 70 would make the Bill consistent with the detail of the White Paper. It recognises the importance to potential licence holders of protecting information relating to their commercial interests that may be disclosed to the regulator as part of the application process. It would encourage them to be more open with the regulator in the knowledge that their commercial interests would be protected. It would impose an express obligation on the regulator to secure the exclusion from the register of information that affected commercial interests.
However, amendment No. 70 would retain the provision's flexibility by continuing to allow the regulator to use discretion so far as is practical and enter in the register information that would be in the public interest. As a further safeguard, it would give people the express right to object to the Secretary of State about the entry of any item. That would complement his existing power to direct the regulator not to enter items. The amendment is perfectly fair. It would protect commercial interests and encourage those who make applications, as they would know that their commercial secrets would not be divulged. It would be of general benefit.

Mr. Drew: Can the hon. Gentleman give an example that would go to the Secretary of State, but would not go to the commission? I am struggling to think of one.

Mr. Page: I can understand the hon. Gentleman struggling; I listened to part of his speech and understand his difficulties. A commercial company may want to have certain details entered on the register, but not those of a marketing plan that it wished to introduce, an activity that it wanted to undertake to gain extra market share, or a method of delivery or operation. It might want matters such as potential ownership to be kept back. I can see no difficulty with that because such information might help the opposition and that would damage the company's interests.
Time is moving on, so I shall speak to amendment No. 74, which would insert the words:
The Council shall, in exercising its functions, have regard to the interest of … individuals who are disabled or chronically sick … of pensionable age … with low incomes … residing in rural area, and … homeless …
That matter arose in Committee in a slightly different form. For the life of us, my hon. Friend the Member for Rutland and Melton (Mr. Duncan) and I could not understand why the Minister refused to allow the Bill to cover the homeless—a vulnerable section of society that should be protected. As he has shown again this evening, he seems to have set his face against looking after the homeless.
In an age of improved communication, it is surely indefensible that the Government have not highlighted the homeless as one of the groups for which the council should have regard. The expansion of electronic communications means that the council should consider the interests of the homeless as much as it considers those of the others on that list, such as the elderly, the disabled or the chronically sick. Why not the homeless? That could be easily achieved by designating a post office box number so that they could receive mail at a sub-post office.
9.30 pm
The problem of homelessness is growing in importance because the Government have failed to tackle it. The most recent Government figures show that, in the past year, there were 105,900 priority homelessness acceptances. In a comparable period in 1997, the figure was still far too high, but it was 102,410, so there has been an increase of more than 3,000.
The measure could help the homeless to take a proper place in society. If one extrapolates the trend—I should like to think that the Government are trying to do something about it—it means that, every day under this Government, five more people are being forced into homelessness.

Mr. Mike Hancock: I am touched by the hon. Gentleman's compassion for the homeless, but if you are arguing for more to be done for the homeless than giving them a post code and somewhere to collect their mail, I could understand it. However, could you explain—

Mr. Deputy Speaker: Order.

Mr. Hancock: I beg your pardon, Mr. Deputy speaker.

Mr. Deputy Speaker: The hon. Gentleman perhaps anticipates the intervention that I must make.

Mr. Hancock: I apologise, Mr. Deputy Speaker.
I should be grateful if the hon. Member for South West Hertfordshire (Mr. Page) would explain the real benefit that he is trying to get for the homeless through that proposition.

Mr. Page: It is nice of the hon. Gentleman to drop into the debate, which has been taking place for a number of hours. He was in for a few minutes several hours ago. Frankly, if I have to explain to the Liberal Democrats the advantages of helping the homeless, we are in difficulty. As I have already said—I shall repeat for the hon. Gentleman very slowly—in this time of electronic communication, it must be of advantage that the homeless are able to have a post office box number for communication and to get advice and support from the Government, rather than using the insecure and inaccurate methods that exist at present. I would like to think that, when the hon. Gentleman looks at Hansard, he will be consumed with embarrassment that he has been so dismissive of that genuine attempt to help the homeless.
The Minister will know that this is not a one-off attempt, or something that has just been produced. We ran it in Committee. My hon. Friend the Member for Rutland

and Melton, who unfortunately cannot be with us this evening, argued far more eloquently than I have that the homeless should be included, yet the Minister seems to turn it down. I remind him that the Prime Minister promised that Labour would
do everything in our power to end the scandal of homelessness, to tackle the spectacle of people sleeping rough on the streets and to end the waste of families sleeping in bed and breakfast accommodation.
Surely, including the homeless in the Bill is a step in the right direction.

Mr. Alan Johnson: As I have said, we believe that clause 38 provides sufficient protection. Amendment No. 70 would undermine the commission's independence by substituting for its discretion what would amount to a formal mechanism for persons to appeal to the Secretary of State if they object to an entry, together with a power for the Secretary of State to direct the commission not to make an entry, if he so decides. Such a procedure would be an unnecessary bureaucratic burden on the Secretary of State and would limit the discretion and independence of the commission without substantively increasing the protection of individuals. Regardless, clause 38(7) provides the power for the Secretary of State to direct the commission not to enter in the register anything that he considers
would be against the public interest or any person's commercial interests.
Inevitably, use of that procedure would also result in delays in getting information on the register, and in the register containing less up-to-date information than is appropriate in the interests of good, fair and open regulation. The presumption must be that entries are made, and that only in exceptional circumstances should an entry not be made. Provision for that is already made fully in clause 38.
As the appointed regulator of the postal market, with clear duties and daily responsibility for regulation, no body is better placed than the commission to weigh up the merits of an entry in the register and, in keeping the register, to decide what is in the public interest. The clause provides adequate safeguards, and I hope that the hon. Member for South-West Hertfordshire (Mr. Page) will not press amendment No. 74.
As for the hon. Gentleman's argument on homeless people, originally, the Bill required the commission to have regard in its work to certain groups of consumers. However, the point was clearly made that that requirement should be imposed also on the consumer council in doing its work. Government Amendment No. 14 provides for such a requirement.
Opposition Members have used that provision to revisit the argument about why homeless people should be grouped with those who are disabled or chronically sick, those who are of pensionable age, those who have low incomes and those who reside in rural areas. The Committee rejected the proposal not because it was hard-hearted or unconcerned about the perils of homelessness, but because, first, the list of those to whom our provision applies is not prescriptive. Moreover, the end of Government amendment No. 14 provides that the list
is not to be taken as implying that regard may not be had to the interests of other descriptions of persons.


Secondly, the groups that we have identified all have specific problems in receiving post office network services. Those problems have been communicated to us by various organisations and charities representing those groups. Therefore, for those who are disabled or chronically sick, there is the "articles for the blind" service, in which any item up to 7 kg can be sent free of charge anywhere in the world. Those who are of pensionable age sometimes have problems in collecting their pension from the post office network. The universal tariff is provided to ensure that postal services are accessible to everyone, including those who are on low incomes. Those who reside in rural areas have particular problems in receiving postal services.
We have had no reports of homeless people having problems with postal services. Neither Centrepoint, Shelter nor any of the other charities involved with the homeless have advanced the type of argument made today by the hon. Member for South-West Hertfordshire. They have not said that providing homeless people with a post office box number is part of the solution in assisting those who sleep rough on the streets, particularly the streets of London.
The Government's approach to a solution—on which I think there is a broad, cross-party consensus—is that the first step is to get homeless people off the streets, not to encourage a street life style. Many of those people have serious problems, whether it is with alcohol abuse, drug abuse, or something else. If we are to tackle those problems, we have to get homeless people off the streets.
Anyone can have a poste restante address or a post office address. Moreover, once a homeless person is in a hostel, he or she will have a postal address at which he can receive benefits and other post.
As we said in Committee, we would not be assisting the homeless by including them in the Bill's provisions and by saying that both the commission and the council have a duty to provide postal addresses for the homeless. Such a provision would encourage a street life style and achieve precisely the opposite to the sentiments expressed by the hon. Gentleman.
Therefore, as the Government said in Committee, the House can safely oppose the proposal without being seen to be cruel or heartless. The hon. Gentleman's arguments, both today and in Committee, simply do not stand up. I should be very surprised if Conservative Members pushed those arguments in a proper debate on how to tackle homelessness. We are addressing that in the Bill, and the hon. Gentleman's comments were unimpressive. I urge the House to rejects amendments Nos. 70 and 74.

Amendment agreed to.

Amendments made: No. 2, in page 18, line 29, at end insert—
'(1A) The requirements of this subsection are that the Commission shall—

(a) give notice of the proposed modifications to the Council, and
(b) consider any representations made in accordance with the notice and not withdrawn.'.

No. 3, in page 18, line 30, after "requirements", insert "of this subsection".

No. 4, in page 18, line 34, leave out "The notice" and insert—
'A notice under subsection (1A) or (2)'.

No. 5, in page 18, line 37, leave out "publication of the notice'and insert—
'the giving of the notice under subsection (1A) or (as the case may be) the publication of the notice under subsection (2)'.

No. 6, in page 19, line 13, at end insert—
'(7A) If, after giving notice under subsection (1A), the Commission decides not to make a final order or confirm a provisional order, it shall give notice of that decision to the licence holder concerned and the Council.'.

No. 7, in page 19, line 13, at end insert—
'(7B) A notice under subsection (1A) shall be given by serving a copy of the notice on the Council and a notice under subsection (7A) shall be given by serving a copy of the notice on the licence holder and the Council.'.

No. 8, in page 19, line 14, leave out "A" and insert "Any other".—[Mr. Betts.]

Clause 38

REGISTER

Amendment made: No. 9, in page 24, line 40, leave out "variation" and insert "modification".—[Mr. Betts.]

Clause 41

DUTIES IN RELATION TO PUBLIC POST OFFICES.

Amendment made: No. 34, in page 27, line 17, leave out "section" and insert "Act".—[Mr. Betts.]

Clause 43

REVIEW AND INFORMATION.

Amendments made: No. 10, in page 28, line 10, after "Kingdom", insert ", other member States".

No. 11, in page 28, line 12, after "Kingdom", insert ", other member States".

No. 35, in page 28, leave out lines 30 to 32.—[Mr. Betts.]

Clause 53

EXERCISE OF FUNCTIONS: GENERAL.

Amendments made: No. 12, in page 33, line 38, after "functions" insert—
'in relation to relevant postal services'.
No. 13, in page 33, line 40, leave out—
'and matters affecting their different interests'.
No. 14, in page 33, line 41, at end insert—
'( ) The Council shall, in exercising its functions, have regard to the interests of—

(a) individuals who are disabled or chronically sick,
(b) individuals of pensionable age,
(c) individuals with low incomes, and
(d) individuals residing in rural areas,
but that is not to be taken as implying that regard may not be had to the interests of other descriptions of persons.'.—[Mr. Betts.]

Clause 62

GOVERNMENT HOLDING IN THE POST OFFICE COMPANY AND ITS SUBSIDIARIES

Mr. Alan Johnson: I beg to move amendment No. 15, in page 39, line 10, after "its", insert "wholly owned".

Mr. Deputy Speaker: With this it will be convenient to discuss the following: Government amendments Nos. 16 to 18.
Amendment No. 78, in clause 66, page 41, line 21, at end insert—
'( ) the effect of the proposed issue or disposal would be that no more than 10 per cent. of the total share capital of the Post Office company at the time of the transfer would have been disposed of.'.
Government amendments Nos. 79 to 81.

Mr. Johnson: The amendments provide further evidence that the Government are sticking to our commitment to keep the new Post Office company and its relevant subsidiaries within public ownership by ensuring that we allow only a narrow portal for share sales or swaps, while allowing it greater commercial freedom.
Amendment No. 16 plugs a potential loophole in the restrictions on the disposal of shares in subsidiaries carrying out the core business by applying the restrictions on the disposal of shares to any subsidiaries owning shares in a relevant subsidiary.
Amendment No. 15 amends clause 62 and seeks to ensure that the Government do not prejudice the rights of any external shareholders in the subsidiaries of the Post Office company by restricting the Secretary of State's power to direct subsidiaries of the Post Office company to issue shares to subsidiaries which are wholly owned.
Amendment No. 17 is a minor drafting amendment to bring the wording of clause 65(3) into line with that of the new subsection (5).
Amendment No. 18 supports the Government's policy of allowing the Post Office greater commercial freedom by allowing the Post Office company and its subsidiaries flexibility to reorganise its structure as it thinks fit. It relaxes the restriction in subsection (2) of clause 65 on the disposal of shares or share rights in a relevant subsidiary by the Post Office company, any of the subsidiaries or their nominees to allow disposal among themselves. Again, there is no harm in the shares being passed round in this way, as each of the parties concerned is subject to the restrictions on disposing of shares to a third party. There is great benefit, because it allows the company flexibility in its structure.
Amendments Nos. 79, 80 and 81 are technical amendments which bring the provisions in those clauses into line with each other.
Amendment No. 79 to clause 69 adds a provision requiring the Secretary of State to consult the Post Office company before exercising his powers to extinguish any of its liabilities and to consult the Post Office company and the subsidiary in question if any of a subsidiary's liabilities are to be extinguished.
Amendment No. 80 provides power for the Secretary of State to make an order to repeal the clause when its purpose is spent. This power mirrors the provision in

clause 73 which provides for the Secretary of State to make an order to repeal clause 73 when its purpose is spent.
Amendment No. 81 removes the requirement in clause 73(7) to consult the Post Office if an order is to be made to repeal the section under subsection (6).

Mr. Bowen Wells: Who drafted these amendments, and why is it necessary to introduce them at this stage? Has the Bill been improperly drafted? Does it reflect Ministers' desires and objectives? Why are we being subjected to this long list of tiny amendments that should have been taken care of in the original drafting of the Bill?

Mr. Johnson: It is not a long list at all. On Second Reading, Opposition Front Benchers were suggesting that there would be over 1,000 amendments. In fact, there were 185, of which only 80 have been Government amendments. I am not as experienced in this place as the hon. Gentleman, but I understand that that number of amendments compares very well with Bills under the previous Government.
9.45 pm
I also make the point that the Post Office is the Methuselah of public sector industries, because it has been publicly owned since 1631, and there is a lot of legislation to tidy up when making changes to the Post Office. I assure the House that I would have preferred not to have had so many amendments this evening, but these are minor, technical amendments and I have ensured that Opposition Front Benchers have been kept informed about our changes.
As I was saying, there is no need to consult the Post Office in the same way if we intend to repeal the clause, as the repeal would not affect it in the same way as the creation of debt.

Mr. John McDonnell: I wish to speak to amendment No. 78 and give an assurance to my hon. Friend the Minister, who is suffering from a heavy cold, that I will not press it to a Division. Amendment No. 78 would affect clause 66, which will enable a partial share sale in the Post Office company to further a joint venture or a partnership. However, no limit is set on the volume of shares that may be sold. As a result, any amount of the Post Office company could be sold off.
As my hon. Friend the Minister has said, we obviously wish to ensure that we fulfil our policy of maintaining the Post Office company within the public sector. That is why we need clarity with regard to clause 66. There are concerns that the Government have not tabled an amendment, as requested in Committee, to limit the amount of shares that could be sold. For example, amendment No. 78 suggests a 10 per cent. maximum. The Government argument has been that that would restrict commercial flexibility and the room to manoeuvre of the company in cementing joint venture deals. However, the Post Office itself, in its evidence to the Select Committee, suggested that that problem would be highly unlikely to arise.
There have been joint ventures and share swaps elsewhere, but they have been restricted to the 5 per cent. level. That has happened occasionally in the telecommunications industry, and has never involved a share swap of more than 10 per cent. France Telecom and Deutsche Telecom, for example, had a swap agreement that involved a 5 per cent. exchange of shares only.
The Government's legislative proposals arise from a Labour party conference motion that stated that there must be no uncertainty or ambiguity, now or in the future, about the commitment of a Labour Government to the continued public ownership of the Post Office. Clause 66, as drafted, is inconsistent with the spirit of that motion. It will raise doubts among the workers in the Post Office and among the electorate about our commitment to the public ownership of the Post Office in the long term. It gives the wrong signals to those in the industry and to the electorate.
I am aware that, today, further talks have gone on that may resolve the problem, and therefore I urge the Government to table a clear amendment on the issue in the other place to prevent any back-door threat to the public ownership of the Post Office.

Mr. Johnson: It must be borne in mind that, at the time of the Labour party conference last year, the issue of share sales to cement an alliance or a joint venture had not arisen. We have ensured that, if any future Government wish to sell shares in the Post Office, that would require primary legislation. However, we recognise that the communications industry is heading towards further globalisation.
I can put it no better than the Communication Workers Union, which is very perceptive on such issues. It has said:
Mail services have been seen as predominantly domestic markets met by national operators. However, the growth of international mail, the opportunities for e-mail and developments in the parcels market are all leading to a more international marketplace that is likely to be dominated by a small number of global players or alliances. The British Post Office cannot afford to stand apart from such powerful trends.
The CWU understands that full well. The point about saying that any future share sales would require primary legislation, except in the case of share swaps to cement a joint venture or an alliance, is to ensure that the Post Office has greater commercial freedom in the public sector.
Our battle in the early 1990s was not to maintain the status quo but to give the Post Office genuine commercial freedom in the public sector. That freedom will allow the British Post Office to move with the major international players. Our competitors have had the same freedom for many years.

Mr. McDonnell: The CWU has stated today:
In our view, the current open-ended nature of Clause 66 is inconsistent with the spirit of the Labour party motion at the conference and, if the Government persists in the current wording, it is bound to raise doubts in the minds of Labour Party members and Labour voters as to the commitment of the Labour Government to the public ownership of the Post Office.

Mr. Johnson: The issue at last year's conference was the monopoly limit and not joint ventures and acquisitions.
I know exactly what the CWU position is, but it is stated on the face of the Bill that Governments cannot bring proposals forward to divest shares. Only the Post Office can do that.
The Post Office begins the process when it makes a proposal to the Secretary of State. If the Secretary of State is convinced that that is in the best commercial interests of the Post Office, he or she will put it forward for affirmative vote in both Houses of Parliament.
Post Office Acts come along only every 15 or 20 years. For example, such Acts were passed in 1953, 1969 and 1981. We cannot be tied to an arbitrary share limit—whether it be 5 or 10 per cent.—that will prevent the Post Office from securing a joint venture or alliance that is wanted by its work force, the Government and by the business itself. If we were so tied, we would have to ask the major market player with which we might be negotiating a deal to hang on for a couple of years until a slot appeared in the Queen's Speech for the necessary primary legislation. That would cause the deal to be lost, which would not be in the best interests of the work force or of the business.

Mr. McDonnell: I believe that we should listen to the work force. The CWU statement today was in support of the 10 per cent. limit.

Mr. Johnson: The triple lock that we have on the mechanism means that it would be senseless to impose an arbitrary figure, but in fact the situation is worse than that.
Hon. Members from all parties—including the hon. Member for Macclesfield (Mr. Winterton), whom I see in his place—opposed the privatisation of the Post Office. We said that there was a way a forward that would allow genuine commercial freedom in the public sector. If the Government diluted or inhibited that commercial freedom by placing caps on joint ventures or acquisitions, that would leave us open to the argument that the only way to deliver commercial freedom was by privatisation. In other words, that would destroy the argument that Labour Members have supported for the past eight or nine years.
The Government have looked at ways to resolve the concerns expressed by CWU members, and we have studied the provision of a special share. However, mergers will take place at the level not of the Post Office holding company, but of the subsidiaries. That is why amendment No. 78 would not have had the effect that its supporters wanted.

Mr. Deputy Speaker: Order. I have given the Minister considerable latitude, as I understand that he is addressing an argument to hon. Members on the Benches behind him, but equally he should be addressing me at the same time.

Mr. Johnson: I apologise, Mr. Deputy Speaker.

Mr. Nicholas Winterton: I have been listening to the Minister's argument, and to the answer that he has given to the hon. Member for Hayes and Harlington (Mr. McDonnell) who, as I am sure the House understands, is clearly seeking to represent the best interests of the Post Office work force. Will the Minister say that the changes that these Government amendments bring about not only safeguard the position of the employees, the interests of the Post Office and the


interests of Government but, more than that, represent the interests of the consumer who is served by the Post Office? If the Minister could give us that assurance, we would be much happier with his brief explanation.

Mr. Johnson: Yes, I can give that assurance. This series of amendments establishes the definition of relevant subsidiaries. Following a report from the Select Committee on Trade and Industry, we went to the extent of ensuring that future Governments could not get around the block on selling shares in the Post Office by putting them into one of its subsidiaries, such as German Parcel, one of the organisations that it purchased recently, by defining what is a relevant subsidiary. So there is no way around this.

Mr. McDonnell: Will the Minister give way? Mr. Johnson: No, I am not giving way again.
My final point is that, if anyone seriously wanted to privatise the Post Office, they would not go down the tortuous route of exchanging swaps and joint ventures. There is no money for the Exchequer in floating shares on the stock exchange. All those shares will, in a sense, be undervalued because they are used to secure an alliance or joint venture. They will not be worth their full weight.
All the arguments suggest, as they did last July, that our proposals in the White Paper and the Bill represent the way forward in terms of genuine commercial freedom in the public sector.

Amendment agreed to.

Amendment made: No. 16, in page 39, line 46, leave out "in this subsection" and insert—
'any other subsidiary of the Post Office company which holds shares or share rights in, or is connected to, any such subsidiary.
( ) For the purposes of subsection (8), a subsidiary of the Post Office company is connected to another such subsidiary which falls within any of paragraphs (a) to (d) of that subsection ("the operating subsidiary") if it forms part of a chain of subsidiaries of the Post Office company which leads to the operating subsidiary and which is identified by the fact that each member of the chain holds shares or share rights in the next subsidiary in the chain.
( ) In subsection (8)'.—[Mr. Alan Johnson.]

Clause 65

RESTRICTION ON DISPOSALS OF SHARES TO THIRD PARTIES

Amendments made: No. 17, in page 40, line 37, leave out "such person" and insert—
'person falling within this subsection'.

No. 18, in page 40, line 37, at end insert—
'( ) Subsection (2) does not apply in relation to any disposal by the Post Office company, any subsidiary of that company or any nominee of the company or subsidiary to any other person falling within this subsection.'.—[Mr. Alan Johnson.]

Clause 69

EXTINGUISHMENT OF CERTAIN LIABILITIES

Amendments made: No. 79, in page 43, line 16, at end insert—
'( ) Before exercising any power under subsection (1) or (2) in relation to liabilities of the Post Office company, the Secretary of State shall consult that company.

( ) Before exercising any power under subsection (1) or (2) in relation to liabilities of a subsidiary of the Post Office company, the Secretary of State shall consult the Post Office company and the subsidiary.'.

No. 80, in page 43, line 16, at end insert—
'( ) The Secretary of State may by order repeal this section.'.-[Mr. Alan Johnson.]

Clause 73

FURTHER PROVISIONS RELATING TO THE CAPITAL STRUCTURE OF THE POST OFFICE COMPANY

Amendment made: No. 81, in page 46, line 4, after "power" insert—
'(other than the power under subsection (6)'.—[Mr. Alan Johnson.]

Clause 93

INVIOLABILITY OF MAILS

Amendments made: No. 36, in page 55, line 26, after "customs" insert "or excise".

No. 37, in page 55, line 27, leave out—
'16 of the Post Office Act 1953'

and insert—
'(Application of customs and excise enactments to certain postal packets)'.

No. 38, in page 55, line 30, leave out "17 of that Act" and insert—
'(Power to detain postal packets containing contraband)'.—[Mr. Alan Johnson.]

Clause 97

CERTAIN EXEMPTIONS FROM POSTAGE ETC.

Amendments made: No. 19, in page 57, line 31, at end insert—
', a member of the National Assembly for Wales'.

No. 20, in page 57, line 38, after "Parliament", insert—
', the National Assembly for Wales'.

No. 21, in page 57, line 40, after "Parliament", insert—
', a member of the National Assembly for Wales'.

No. 22, in page 58, line 10, after second "Parliament" insert—
', the National Assembly for Wales'.—[Mr. Alan Johnson.]

Clause 105

THE POSTCODE ADDRESS FILE

Mr. Page: I beg to move amendment No. 75, in page 62, line 16, at end insert—
'and—

(c) make provision for any person to seek and secure any reasonable correction in their details.'

Mr. Deputy Speaker: With this it will be convenient to discuss amendment No. 76, in page 62, line 16, at end insert—
'(1A) In the File—

(a) each address shall reflect the county in which the addressee resides, except in as much as the efficiency of sorting addresses near county boundaries requires reference to a neighbouring county on the official address; and
(b) each address shall include a county.'.

Mr. Page: I hope that the Minister appreciated the fact that I did not intrude into private grief a few moments ago. I shall simply say that there is greater joy in heaven over a sinner that repenteth.
These amendments are really the brainchild of my hon. Friend the Member for Rutland and Melton (Mr. Duncan). He has an enthusiasm for them that transcends anything else in the Bill other than the issue of homelessness, which the Minister so brutally dismissed. The knowledge that his amendment has been accepted will speed my hon. Friend's recovery and have him leaping from his sick bed with joy if the Minister is generous enough to accept it.
I will not take too long in going over these proposals, as they speak for themselves. Amendment No. 75, which would make provision for any person to seek and secure any reasonable correction in their details, is simple and straightforward. The postcode address file is what it appears to be—a database of addresses. It is rare for a name to be on the file, as the Minister pointed out in Committee, and it must be as accurate as possible.
I welcome the provision to allow access to the information that is held by the Post Office. As it is in the interests of the Post Office and of individuals for that information to be accurate, it is sensible to allow people to seek and secure reasonable corrections if the details held are wrong. I shall be intrigued to know whether the Minister can find any objection to the amendment.
Amendment No. 76 makes the relatively simple point that the postcode address should reflect the county in which the addressee resides. I understand the point made by the Minister previously—

It being Ten o'clock, the debate stood adjourned.

Motion made, and Question put forthwith, pursuant to Standing Order No. 15 (Exempted business),
That, at this day's sitting, the Postal Services Bill may be proceeded with, though opposed, until any hour.—[Mr. Betts.]

Question agreed to.

As amended in the Standing Committee, again considered.

Question again proposed, That the amendment be made.

Mr. Page: As I was saying, I understand the point made previously by the Minister that postcodes have not hitherto reflected the counties in which people live and that there would have to be significant changes to the records kept by the Post Office. Given the problems that have arisen in recent years and computer projects in the public sector, I have some feeling for its nervousness in contemplating change. However, I can see no good reason why county affiliation should not be recognised and accepted throughout postal services as part of the postcode address file.
The Minister was good enough to explain to the Committee on 21 March how insistent he has been in including "East Yorkshire" on his outgoing mail from his constituency in Hull. He explained that invariably he lets his bank or building society know that he lives in that county. What is good enough for the Minister in his constituency as a constituency Member and as a private individual should be good enough for the postcode address file. I look forward to what the Minister has to say—

Mr. Alasdair Morgan: Will the hon. Gentleman give way?

Mr. Page: I am bringing my remarks to a close. I would far prefer the hon. Gentleman to address his remarks to the Minister, who is an expert on how the postcode file works.

Mr. Ieuan Wyn Jones: I am pleased to have the opportunity to speak in support of amendment No. 76. I never thought, given my experience of the House, that I would agree wholeheartedly with an amendment promoted by the hon. Member for Rutland and Melton (Mr. Duncan). I wish him well after his hospital treatment.
I support the amendment because there is a great deal of irritation in my constituency of Ynys Môn that the name of the county is not recognised on the current database held by the Post Office. Only today, I was replying to a letter from one of my constituents who shares that irritation intensely.
The Post Office database carries in Wales the names of the counties prior to reorganisation in 1996. People in Anglesey do not like to continue to receive their letters with the county name of Gwynedd. That county, as it was then constructed, was abolished in 1996. Gwynedd is now a much smaller county. A similar situation exists in other parts of Wales. For example, my hon. Friend the Member for Ceredigion (Mr. Thomas) will have letters addressed to Dyfed and not to Ceredigion.
We are told by the Post Office that it is no longer necessary to have the county name on a letter. All that is needed is the post town and the postcode. So why are the old counties on the Post Office database? We are told that it would be far too expensive to change the database. We are told also that in a few years time, the Post Office will be changing all the databases and removing all the county names.
Historic county names are extremely important. People retain an affection for their counties. In an area such as Anglesey, which is an island, people are independently minded and want their letters addressed to them as the people of Anglesey. We are asking the Minister only to recognise that there is strong feeling on this issue. It is a small matter for the Government to accept, but to do so would make many people happy.

Mr. Nicholas Winterton: I mirror the views expressed by the hon. Member for Ynys Môn (Mr. Jones) because, as with his constituency, amendment No. 76 relates to my proud county of Cheshire. It is a very ancient county. Indeed, the Earl of Chester is a member of our royal family—[Interruption.] I am coming to postcodes.
The county name means a great deal to many people. I shall go a little further than did the hon. Member for Ynys Môn by saying that insurance companies often set


lower premiums for some counties than for others. A constituent of mine who lives in or near the village of Kettleshulme who loses "Cheshire" from his or her address may be included in Greater Manchester—[HON. MEMBERS: "Oh!"] "Oh!" indeed—the matter is important. In Greater Manchester, the insurance premiums are higher. A cost is involved for such people, irrespective of the great affection in which most people hold the county in which they live.
I am not up to scratch on exactly how postcodes are worked out, but if the postcode rather than the county is the critical factor, the Post Office could stick to the postcode but leave the county.

Mr. Alasdair Morgan: How does the amendment apply to Scotland, where counties ceased to exist in 1975? Nearer to the hon. Gentleman's home, how would it apply to areas of Lancashire that were transferred into Cheshire at that time? Would people be given a choice?

Mr. Winterton: The debates of the 1970s on local government reorganisation created considerable splits within political parties across the House. People took mixed views on the proposals of that time. I shall certainly not seek to intervene in matters internal to Scotland, irrespective of my view on devolution, which is not, as you will quickly remind me, Mr. Deputy Speaker, part of this debate.
The hon. Gentleman referred to Lancashire, and considerable feeling remains to this day about the areas of Lancashire which were transferred into what is known as Greater Manchester.

Mr. Peter Atkinson: My hon. Friend has referred to Scotland, so he may wish to know that people who live in Berwickshire may have a Berwick-upon-Tweed postcode and address. In that case, these matters may cross a national frontier.

Mr. Winterton: I am not sure whether this is relevant, but I had the honour to Chair a sitting in Westminster Hall at which matters relating to regional aid in Berwickshire and Berwick-upon-Tweed were discussed at some length. I understand the problems relating to the border in that area. I shall not try your patience, Mr. Deputy Speaker, but my hon. Friend clearly made an important point.
I consider the two amendments eminently sensible, reasonable and rational. They could add to the attraction of the Bill by meeting the needs of many people who feel great loyalty to the county in which they live. I wish my hon. Friend the Member for Rutland and Melton (Mr. Duncan), who is currently in hospital, a speedy recovery, and I hope that the Minister will aid that recovery by conceding the amendments and granting the House an opportunity to be parochial, but parochial in the interests of the people whom we serve.

Mr. Baldry: Those of us who served on the Standing Committee became experts on the postcode system. To the possible surprise of the Minister, we spent almost as much time debating it as we did debating the Post Office monopoly. The reason for that—another surprise for the Minister, I suspect—was that there were concerns on both sides of the Committee about the working of the postcode system.
To his credit, the Minister took a wholly logical approach to the subject: all that mattered was the postal town and the postcode. All the members of the Committee understood that—it was perfectly rational and logical and perfectly well explained. The trouble is that matters do not work out like that on the ground.
My hon. Friend the Member for Uxbridge (Mr. Randall), who was an Opposition Whip on the Bill, explained several problems relating to postcodes and postal addresses in his constituency. The hon. Member for Forest of Dean (Mrs. Organ) explained that, although part of her constituency was in Gloucestershire, it had a Welsh postcode and address, which caused considerable confusion.
The matter provides an interesting test of the extent to which the Minister has discussed with the Post Office the concerns expressed by Members on both sides of the House. Has he had an opportunity to discuss those concerns? Even though he might not want to propose or accept an amendment, has he been able to find a pragmatic solution to improve the situation?
The matter was not wholly fanciful, nor was it solely confined to Rutland—the concerns were shared by all members of the Committee. We devoted a considerable number of our sittings to the discussion of those problems, with no repetition or filibustering. Real concerns were expressed on both sides of the Committee. I hope that the Minister has had the opportunity to discuss them with the Post Office and that he can give the House some information on how they can be pragmatically addressed.

Mr. Alan Johnson: The matter was the subject of passionate debate in Committee. If the hon. Member for Rutland and Melton (Mr. Duncan) has had his appendix removed, I am sure it has a postcode on it. He was still seething about events that occurred in the early 1970s—as are many other hon. Members.
Let us get that matter straight. The Post Office is not responsible for the changes introduced by the Government of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) in the early 1970s, who moved Slough from Buckinghamshire to Berkshire and Bournemouth from Hampshire to Dorset, and introduced the county of Humberside—that was never warmly received in my neck of the woods. All those changes had nothing to do with the Post Office.
Similarly, some people believe that the Post Office is responsible for numbering and naming roads and streets. It is not. If it were, the sequences would be much more logical. As we are all aware when we go canvassing, No. 2 can be followed by No. 23. Such issues are not the responsibility of the Post Office.
Clause 105 would ensure that the postcode address file was maintained and made available to those who wanted to use it. That provision has unleashed much passion. I have already taken the matter up with the Post Office, but I shall briefly explain that the postcode is the Post Office's system of routing mail through the new automated equipment. Only the post town and the postcode are needed, thus for this place SW1 is the outward code and OAA is the inward code. That is


all the Post Office needs. Anyone can put the county name on his letters if he wants to do so. That is fine. The Post Office does not say that county names are not allowed.

Mr. Drew: All the counties would have to be Tipp-Exed off the envelopes.

Mr. Johnson: That would create a few more jobs in the Post Office.
To insist that the Post Office must go to the enormous expense of adding a superfluous element to the postcode, which is not needed, would be over-prescriptive.

Mr. Simon Thomas: The Minister said that only the postcode and the postal address were needed. In that case, why has the Post Office in Wales admitted that envelopes addressed in Welsh—even when they include the postcode—take longer to arrive than those addressed in English?

Mr. Johnson: That is one question that I absolutely cannot answer. I will take it up with the Post Office.
Counties are very important to people. We understand that; the issue is laden with emotion. However, although we may be prepared to use a county name in our addresses, it is a big step from that to insisting that the Post Office keeps superfluous information on a postcode address file that this legislation would give it a duty to maintain, at considerable expense.
What I will do to address the point raised by the hon. Member for Banbury (Mr. Baldry) is continue my discussions with the Post Office. I shall ask about the point that was raised by the hon. Member for Ynys Môn (Mr. Jones)—the suggestion that all Welsh county names will be abolished by the end of the year. I shall also raise the point that was, I believe, the original catalyst for the debate—the argument that people who have the wrong postcode find it difficult to get it changed because there is a horrendous system of bureaucracy to go through, which is not useful to the Post Office as it means that mail is delayed because the wrong postcode is used.
I will take up those issues, but I ask hon. Members—

Mr. Nicholas Winterton: Will the Minister respond to the argument that sometimes insurance companies take the Post Office address as the formal address, and that that address might suggest that a residence is in an area where it is not? It might be described as being in Greater Manchester, when it is not. Although I have great regard for Manchester, that great second city of our country, there could be financial implications. If people want their county to be displayed on their address, is it right that a service provider such as the Post Office should tell them, "That is superfluous as far as we are concerned, and you can't have it"? Should not the Post Office serve the public?

Mr. Johnson: The Post Office is not saying that the use of county names will delay the mail, or that it is prohibited. People are perfectly entitled to use a county name in the address. The point is that the Post Office does

not need the county name for the postcode address file. It is unnecessary to insist that it puts superfluous information into the file.
I shall send a copy of the Hansard of this debate to the chief executive of the Post Office tomorrow to further our discussions on solving some of these problems. I ask the Opposition to withdraw the amendment, but if they press it to a Division I hope that hon. Members will vote against it.

Mr. Page: I know that my hon. Friend the Member for Rutland and Melton (Mr. Duncan), lying on his sickbed, will be delighted by the passion that his amendments have raised. Representations have come from Wales, Scotland, northern England, middle England and southern England. However, I shall keep the Minister's uncaring, unfeeling response from my hon. Friend in case it inhibits his recovery. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 109

ORDERS

Amendments made: No. 39, in page 63, line 44, after "order" insert—
', or of the Treasury to make regulations,'.

No. 40, in page 64, line 1, after "order" insert—
', or of the Treasury to make regulations,'.

No. 41, in page 64, line 6, after "State" insert—
'or (as the case may be) the Treasury'.

No. 42, in page 64, line 16, at end insert—
'( ) The power of the Secretary of State under section (Subsidy for public post offices) as extended by this section may be exercised by modifying any enactment.'.

No. 43, in page 64, line 16, at end insert—
'( ) Regulations under section (Application of customs and excise enactments to certain postal packets) shall be subject to annulment in pursuance of a resolution of the House of Commons.'.—[Mr. Betts.]

Mr. Alan Johnson: I beg to move amendment No. 82, in page 64, line 19, leave out—
'and paragraph 2 of Schedule 3'.

Mr. Deputy Speaker: With this it will be convenient to discuss Government amendments Nos. 83 to 88.

Mr. Johnson: Amendments Nos. 82, 83, 85, 86 and 88 preserve existing pension rights in the various pension schemes—of which there are many in the Post Office, some dating from civil service days. They protect those pension rights and transfer them across to the new Post Office company. Amendments Nos. 84 and 87 concern third-party dealings with the Post Office company in respect of land, and remove the burden on the third party to inquire whether Treasury consent to any previous dealings with the land was needed, or, if it was needed, whether it was given.
These are technical amendments, which I do not think will raise much controversy. They protect the pension rights of all those working within the Post Office.

Mr. Forth: That is all very well, but the Minister has not even begun to explain why the apparently simple and


straightforward part of the schedule that the amendment seeks to replace has to be replaced. Presumably, if the Minister were of a mind to do so, he could explain what was defective in the original wording, which I thought was self-explanatory. It would appear that there was something sufficiently defective in six lines of text for them to be replaced by the substantial wording before us, particularly in amendment No. 83.
It is an old trick by Ministers, which I have come across over the years—and officials know this as well—to slip the word "technical" into an explanation, or lack of explanation, thinking that that will lull the House into a false sense of security and all will be well. You and I, Mr. Deputy Speaker, have been around for long enough to know that that is not always the case, and that the use of the word "technical" is not sufficient to explain the replacement of six rather simple and elegant lines of text with the very long, complicated wording in amendment No. 83 and the other amendments.
It does not do the Minister or the House justice for him to expect to slide over the matter in that way. We need to know with more precision what was wrong with the previous words that required them to be replaced by this lengthy and complicated text. What is in the detail of amendment No. 83 that should give more reassurance to those for whom we have the greatest concern, the employees, with regard to their accumulated pension rights? Why was it felt necessary to go to this length of detail, unless there may have been something wrong, something rather sinister, lurking in the background that required reassurance of this length and this description for the employees involved?
An answer to that question is the very least that we could expect at this stage, not a muttering about "technical", and not a superficiality of the kind that the Minister seems to have picked up very quickly. It is one thing for old ministerial lags to get away with that sort of thing, but from a fresh-faced new boy of the type that we have before us today I find it rather shocking.
All that I wanted to do, Mr. Deputy Speaker—and I will not presume upon your patience any longer—was to give the Minister an opportunity to shine on this occasion, to put him through his paces and let him show his mastery of the amendment so that he could explain to us, but, more important, to the people most affected, what it is that he believes this will do that the previous wording did not do.

Mr. Johnson: I suppose that when I become an old lag I shall follow the right hon. Gentleman's example. He has made fleeting visits to the Chamber during this debate. He came in halfway through the debate on new clause 1, raised a number of points—having not even heard the opening speech by my right hon. Friend the Secretary of State—and then disappeared before my right hon. Friend had a chance to reply. Now he comes and raises not a single point on the amendments, but instead asks why we have to remove elegant wording on page 75.
I note that the question does not come from the Opposition Front-Bench spokesmen, who know full well that throughout the Committee stage we explained that those measures were there temporarily so that we could carry forward a whole host of issues that are very complicated, as pension matters are. I advise hon. Members to read Hansard. I cannot understand why anyone would not have read the Hansard report of the

Committee stage by now. We explained that we could not just leave the position on the basis of that simple wording. We need to ensure that the people who work in the business, who are part of about six or seven different pension schemes, are assured—[Interruption.] We will see how quickly letters on the Bill arrive. We need to ensure that people are assured to every last dot and comma that their positions are safeguarded. That is the purpose of the amendments, which I hope the House will support.

Amendment agreed to.

Amendment made: No. 44, in page 64, line 21, after "91" insert—
'(Subsidy for public post offices),'.[Mr. Betts.]

Clause 111

GENERAL FINANCIAL PROVISION

Amendment made: No. 45, in page 64, line 29, at end insert—
'( ) any expenditure incurred by the Commission in consequence of this Act,'.[Mr. Betts.]

Clause 113

INDEX OF DEFINED EXPRESSIONS

Amendment made: No. 46, in page 67, line 35, at end insert


'Public post office
Section 41(3)'.—[Mr. Betts.]

Clause 115

MODIFICATION OF LOCAL ENACTMENTS ETC.

Amendment made: No. 47, in page 68, line 10, leave out—
', or in any instrument or other document,'.—[Mr. Betts.]

New Schedule 1

TRANSFER TO THE POST OFFICE COMPANY: TAX

Corporation tax: general

1. The Post Office company shall, on and after the appointed day, be treated for all purposes of corporation tax as if it were the same person as the Post Office.

Shares and other securities

2. Any share issued by the Post Office company or any of its wholly owned subsidiaries in pursuance of section 62 shall be treated for the purposes of the Corporation Tax Acts as if it had been issued wholly in consideration of a subscription paid to the company concerned of an amount equal to the nominal value of the share.

3. Any security (other than a share) issued by the Post Office company or any of its wholly owned subsidiaries in pursuance of section 62 or 73 shall be treated for the purposes of the Corporation Tax Acts as if it had been issued wholly in consideration of a loan made to the company concerned of an amount equal to the principal sum payable under the security.

Transfer arrangements

4. The existence or exercise of the powers of the Secretary of State under section 61 shall not be regarded as constituting or creating arrangements within the meaning of section 410 of the Income and Corporation Taxes Act 1988 (arrangements for the transfer of a company to another group or consortium).

Tax—free benefits

5. Nothing in this Part and nothing done under it shall be regarded as a scheme or arrangement for the purposes of section 30 of the Taxation of Chargeable Gains Act 1992 (tax—free benefits).

Assets acquired by the Post Office in 1969

6. The Act of 1992 shall apply in relation to a disposal by the Post Office company of an asset acquired by the Post Office by virtue of Part III of the Post Office Act 1969 as if the acquisition or provision of the asset by the Crown had been the acquisition or provision of it by the Post Office company.

Stamp duty

7. No transfer effected by virtue of section 61 shall give rise to any liability to stamp duty.'.—[Mr. Betts.]

Brought up, read the First and Second time, and added to the Bill.

Remaining Government amendments agreed to.

Order for Third Reading read.—[Queen's Consent, on behalf of the Crown, signified.]

Mr. Byers: I beg to move That the Bill be now read the Third time.
I am sure that all Members of the House would like to thank those Members who served on the Standing Committee that scrutinised the Bill's detail. In particular, we thank my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) and the hon. Member for Bournemouth, West (Mr. Butterfill) who chaired the Committee's proceedings fairly and efficiently. I add my personal thanks to my hon. Friend the Minister for Competitiveness who was responsible for taking the Bill through Committee. It was the first time that he has taken a Bill through Committee, and I have been very pleased at the way that he was able to conduct business and take through Government proposals. I know that all members of the Committee enjoyed the opportunity of engaging in lively and, I hope, constructive debate.
The Bill is part of the Government's programme of modernisation and reform. As hon. Members will know from this evening's debates, it provides opportunities to preserve the national network of sub-post offices and to ensure that there will be a national network that can be supported, if necessary, through the scheme for providing a subsidy to which the House agreed this evening.
We will, through the access criteria, ensure that all people in all parts of the country have access to postal services. We will also be able to ensure that the post office network can plan for a future based on diversity and investment in computerisation and that it can ensure that post offices can meet not just the needs of postal services, but of the communities that they serve.
The Bill guarantees a publicly owned Post Office, but with the commercial freedoms that will be needed to meet the challenges of the 21st century. It will be able to compete and have the money to invest in the future. By reducing the cut that is taken by the Treasury, we will provide the Post Office, for the first time, with access to the funds that it will need for investment to ensure that it can develop its services.
In the past, under the previous Government, the Treasury, rather than the Post Office, was always treated as a priority. Under this Government, the Treasury is withdrawing from the control that it has over finance, and

resources will be provided to the Post Office for the first time. That ensures that, when we talk about commercial freedoms, it is not just rhetoric; we are also providing resources to make the Post Office's commercial freedom a reality.
The Bill will lift the uncertainty under which the Post Office has had to live for far too long. It will provide a firm basis for competition in the postal services market and it will provide a better deal for consumers, including those who are socially disadvantaged. It will ensure a strong Post Office that is better able to serve all its customers in all parts of the country. I invite the House to support the Bill on Third Reading.

Mr. Page: As the House knows, the Opposition moved a reasoned amendment to the Second Reading motion for the Bill because
it introduces an unsatisfactory structure of ownership which falls short of granting full commercial freedom, introduces uncompetitive borrowing criteria and does not include provision for transparent accounting practices, imposes new burdens of regulation on private companies rather than encouraging competition and fails to introduce clear access criteria to protect the network of sub Post Offices.—[Official Report, 15 February 2000; Vol. 344, c. 815.]
The House will be fully aware that we had a long debate on the last point under Government new clause 1, at the start of this evening's proceedings. That debate proved the depth of concern felt by so many hon. Members. Now that the Committee and Report stages have concluded, we look to the other place to introduce appropriate amendments to inject common sense into the Bill.
I echo the Secretary of State by congratulating the Minister for Competitiveness on the friendly, open way in which he has conducted affairs. I do not want to damage his career prospects, but I must point out that promotion in the Department of Trade and Industry seems a distinct possibility. I did not find him very accommodating with our amendments, but we cannot have too much at once.
When the Secretary of State told the House on 15 February, on Second Reading, that he knew how many amendments he would table, we little realised that he was not joking. Despite all the spin and gloss that he has just put on the Bill in his speech, saying that it will be marvellous, it is most unsatisfactory that, on Report, we should have been debating important issues that affect people's livelihoods, as we did in our discussion of new clause 1. That was bounced on the House without our having the opportunity to take a long, measured look at what it implies.
A pattern is emerging. We have had the shambles of the Utilities Bill, which has just completed its Committee stage and will be before us tomorrow. We have lost count of the hundreds of amendments that the Government have tabled. That is the hallmark of a Department that is out of control. The fact that new clause 1 was tabled at such a late stage shows that it is a panic measure, introduced simply to try to satisfy last Wednesday's mass lobby.
We have had several debates on the Post Office in this Chamber and in Westminster Hall, and they concentrated on the sub-post offices. That point was emphasised by two debates last Wednesday. Those debates and today's proceedings highlight the confusion and muddle in the


Government and the apparent lack of leadership by the Secretary of State. I might be doing the right hon. Gentleman a disservice, but despite all his rhetoric, I think that he would have preferred privatisation to the fudged solution provided by the Bill. Perhaps even this new Labour Government, with their vast majority, still have no stomach for that.
We can get a little distant from the subject matter in our debates, and it is useful to remind ourselves of the sheer size of the postal services and their importance to our economy. There are four main operating arms: Royal Mail, Parcelforce, Post Office Counters Ltd. and the subscriptions services. The Post Office employs more than 190,000 people and has a turnover in excess of £6.7 billion. However, we have said again and again, including on Report a few moments ago, that there is increasingly serious competition from overseas rivals as well as pressures from fax and electronic mail services. With all that comes the prospect of greater liberalisation in the European Union.
It has been clear for some time that the present situation cannot be maintained indefinitely without the Post Office losing market share, notwithstanding the comments made by the previous Secretary of State in his announcement just before Christmas in 1998. A publicly owned and financed business subject to all the traditional constraints on pay and pricing, on acquisitions and borrowing, and on partnerships and joint ventures has become increasingly anachronistic.
Postal administrations in countries such as Denmark, Germany, the Netherlands, New Zealand and Switzerland are already benefiting from the greater commercial freedoms that they have achieved. We would do well to remember what some of them have done. Some years ago, the Dutch postal business KPN bought TNT for 2 billion Australian dollars—a huge sum. The German post office acquired more than 20 per cent. of the shares in DHL.
That is the size of the forces massing against us. In both of those countries and in France, the machinery and the rules of the European Union are being used to strengthen those postal organisations before they are fully or even partially privatised. That gives an idea of the market pressures that will be exerted on our own Post Office.
The Bill takes a faltering step down the path to the reality of the commercial world, but surely the Post Office, and in particular Royal Mail, must be set completely free through privatisation, if it is not to be a bit player on the world stage of postal matters. If, before the next general election, the Government want to take that extra step towards privatisation, they can rest assured that we would be only too willing to assist them in that task.

Mr. Cotter: The atmosphere in Committee was good natured, and I congratulate the Minister, especially on accepting my amendments and introducing measures that we welcomed. [Interruption.] The unaccustomed support of my hon. Friends has somewhat put me off.
We are approaching the end of a long process to bring the Post Office into the 21st century. The previous Tory Government lost many valuable years while they hummed and hawed about whether to privatise or whether to do anything at all. In fact, they did nothing.
From 1992 to 1997 the Post Office was in limbo. In July 1992 the Tory Government announced a review of the structure and operations of the Post Office. In 1994 a consultation paper was issued. The confusion carried on, with the Tory President of the Board of Trade saying that he preferred privatisation as an option for the Post Office, but did not have parliamentary support.
In 1996 privatisation was back on the agenda, with a plan to break the Post Office up into 11 regional franchises, similar to the rail privatisation. It was reported that as part of the proposed measures, a 5p cut was possible in the rates for London postal deliveries, which would have had an impact elsewhere in the country.
The previous Government wasted much time in discussion. I recollect that in Committee, the spokesman for the Conservatives complained that we were rushing matters. However, the Government have addressed many of the issues that needed to be addressed. I am glad that they have recognised the need for a publicly owned service. The importance of the Post Office to communities is reflected by the extraordinary number of debates on it that we have had in recent months, as Ministers know. Only last week, there was a strong lobby.
We were pleased but muted in our response today when the Secretary of State introduced new clause 1 because, as the right hon. Gentleman will recognise, his opacity was very much to the fore. We want clarification. We want the new clause to be implemented, and we are pleased that the Government seem to have responded to pressure from the lobbies—

Mr. Don Foster: And from you.

Mr. Cotter: And from me, as my colleague says. Anyway, the Government seem to have responded to pressure with their proposal for a subsidy, but, as I have said, we await clarification.

Mr. Hancock: Does my hon. Friend agree that a cloud of doubt and uncertainty still hangs over the sub-post office network, and that, despite the promise that they gave earlier this evening, the Government have not done enough to give credibility to their claim that it is safe in their hands?

Mr. Cotter: I agree. So many issues are involved that I could wax on indefinitely—[Interruption.] I assure you that I will not, Mr. Deputy Speaker, but let me deal with just one of those issues.
We are concerned about sub-post offices, and about the closure of banks. We have had an assurance from the Government; when I had a meeting with a top manager just the other day, he said that he was in touch with 12 banks with the aim of getting a service operating. That is welcome, but we still have the problem of the lack of clarity. There is still the question of whether the Horizon project will work well with the software that needs to be designed. Will it be able to offer a real banking service?
As my hon. Friend the Member for Portsmouth, South (Mr. Hancock) pointed out, there are many other issues to be dealt with, but I shall not deal with them at this time of night. [HON. MEMBERS: "Keep going!"] I shall finish while I am ahead.
We are keen to see what will happen, especially to sub-post offices. We shall wait to see how words translate into action, and, in that sense, I look forward to future moves by the Government.

Mr. Edward Leigh: The Bill proves that, however often things seem to change, they never change. It is much the same Bill that officials brought to us in April or May 1992, when we had won a general election. We rejected that partial approach on the basis that it was muddled and half-hearted, and would not deliver the first-class postal system that the country needs and deserves.
I suppose the Government will argue that the Bill represents a sensible and non-ideological point of view. In fact, a sensible way of proceeding would be to recognise that Royal Mail is a successful, profit-making international company, at least potentially, and that, as such, it simply must be allowed to compete. It must be allowed to make acquisitions; it must be able to beat off the challenges of the technological age, and, above all, to beat off fierce competition from its German and Dutch rivals. As long as it is under state control, it will never be able to be the highly successful company that it could be.
That is Royal Mail, and that is the future of Royal Mail. That is what Royal Mail will become in the long term. If only Ministers like the Secretary of State, who believe in the vision that I have described, had had the courage of their convictions, we would not now be discussing the privatisation of Royal Mail.

Mr. Derek Wyatt: Does the hon. Gentleman accept that, if we took just that line, many sub-post offices would close?

Mr. Leigh: That is the point of view—the untruth, in a sense—that the Opposition always present. They try to muddle up two issues. [HON. MEMBERS: "The Opposition?"] The opposition to what I have been saying, that is.
Two businesses are involved. There is Royal Mail, which is a competitive, profitable business that can be privatised; and there is Post Office Counters Ltd, an overall national structure which, I agree, cannot be privatised. We made that clear—[Interruption.] The national structure—Post Office Counters—is owned by the state. We made it clear when we were hoping to privatise Royal Mail that Post Office Counters would be retained in the public sector to ensure an income stream to the privatised sub-post offices. [Interruption.]

Mr. Deputy Speaker (Mr. Michael J. Martin): Order. It is extremely unfair to the hon. Gentleman that so many conversations are taking place. The House must come to order.

Mr. Leigh: The Government constantly repeat that the Conservative party wants to privatise the Post Office, yet we intended to privatise only Royal Mail. We never intended to privatise Post Office Counters. Despite our determination to privatise Royal Mail, we would have maintained the universal tariff and universal delivery. [HON. MEMBERS: "How?"] Through the Post Office regulator. The Bill, which we would have brought before Parliament—and we shall introduce it one day—[Interruption.] What will happen is inevitable. The Government will find that they simply cannot allow the Post Office to be a strange creature, half public, half

private, owned by the state yet allowed to compete in the private sector. That is unfair and uncompetitive, and it will not happen.
Labour Back Benchers must know that the Government' s secret agenda is full privatisation. That is the logical conclusion of their proposals. Why not be honest about it and privatise Royal Mail, but with the protections that I described to ensure a universal tariff and universal delivery? That could be achieved.
Post Office Counters is a different operation. Sub-post offices are already in private hands. They are run by business men and women, who want not subsidies, but an income stream. Post Office Counters must be kept in the public sector and the income stream must be guaranteed. The Bill will not achieve that. The measure gives the Government only the power to provide subsidies.
The Government's approach to the Post Office Counters network is wrong. Instead of forcing pensioners to accept their pensions through a bank account, we should mechanise sub-post offices and ensure that every sub-post office has the ability to develop modern post office and banking services. Pensioners could thus take their pensions from sub-post offices. The Government claim that they are providing for that. Their constant refrain is that a pension costs only 1p to deliver through the bank, but 48p through the Post Office. However, they do not admit that although it costs 1p to transfer the money from the bank to local distribution centres, it costs much more to pass the money over the counter.
Today we read that Lloyds bank will charge its customers 50p to use the cash machines. The Government must come clean; there is no way out. Once one forces pensioners to accept their pensions through a bank account, they will be subject to hidden charges. Nobody has explained how those costs will be paid. Banks are not charitable organisations; they will insist on their costs being met. The public purse or pensioners will ultimately have to pay. That is why the Government's approach is wrong.
The Government could have introduced a Bill that ensured that Royal Mail was competitive, profitable and independent. They could have retained Post Office Counters in the public sector and guaranteed an income stream for sub-post offices. They could have helped sub-post offices to mechanise and prepare for the future. That would have been an exciting, worthwhile and right measure. The Bill simply represents the Secretary of State putting a toe in the water. It is a pity that he cannot have the courage of his convictions and introduce a Bill that we all support.

Mr. Baldry: I promise not to detain the House long, but, having sat through proceedings on a number of Select Committee reports on the Post Office and most of the debates in Committee, I want to make a few comments.
On Third Reading, the Bill is a muddled halfway house and the Government have failed to give the Post Office the freedom that it needs to compete against its international rivals. Without full commercial freedom, it cannot take advantage of being the most efficient postal service in the world. Curiously, new clause 1, which proposed some subsidies, was introduced on Report. All Conservative Members, along with the National Federation of Sub-Postmasters, wish that not an opaque


subsidy, but a real income stream, had been introduced to support the post office network. The proposal was needed only because the Government are proceeding with the disastrous policy of switching to automated credit transfer, which threatens the survival of thousands of sub-post offices across Britain.
In months to come, Conservative Members will look for transparency in the accounting structures to ensure that there is no undue or hidden cross-subsidy from monopoly to non-monopoly areas in the Post Office. We have welcomed the decision to grant plc status, but there is no support for the 100 per cent. retention of public ownership. The Government should have sold at least 51 per cent. of the shares, which would have enabled the Post Office to compete on a level playing field, particularly with Dutch and German post offices. We all know why the Government held back and this evening we heard examples of how they are beholden to the trade unions. The Minister said that Post Office Bills come around only once every decade and it will be interesting to see how long this one endures. Back-tracking on plans to reduce the Post Office's legal monopoly over deliveries from £1 to 50p, which followed strong trade union opposition, is another example of how the Government are in thrall to the unions.
Without full commercial freedom, the Post Office cannot take advantage of being the most efficient postal service in the world, so there is real doubt as to whether the Bill will succeed in its aim of providing greater commercial freedoms. It offers little comfort to those threatened with the loss of their livelihood following the Treasury-led decision to switch benefit payments to ACT and the future of a third of the 18,5000 sub-post offices is at risk.
Although the Bill puts in place the mechanism for setting out access criteria for the post office network, details will not be forthcoming until after the performance and innovation unit has reported. Again, that is a bizarre way to implement legislation. However, nothing surprises me about a Government who managed to introduce what they admit to be the most important measure in the Bill not on Second Reading or in Committee, but on Report. That is perhaps their hallmark; it is certainly the hallmark of the Department of Trade and Industry. They create huge problems and spend a considerable time struggling to solve them. That is apparent in automotive industry policy, energy policy—yesterday's statement to the House made it clear—and postal services policy.
We all hope that the Post Office will be able to compete against international competition, but I fear that this muddled, halfway house of a Bill is a disservice to the Post Office and to United Kingdom consumers.

Mr. Burns: As my hon. Friend the Member for Banbury (Mr. Baldry) said, the Bill is a muddled halfway house. It represents a group of issues that have been lumped together in a Post Office Bill because they relate to post offices. However, for people outside the House who are not aficionados of the minutiae of the problems facing the Post Office in respect of its ability to compete, the outstanding concern is the future of the post office and sub-post office network throughout this country.
As the Secretary of State candidly admitted in a somewhat cavalier fashion, his thinking and decision making were affected not by the relevance of last

Wednesday's debates in Westminster Hall and in the Chamber, but—his words show how the Government treat the House with utter contempt—the 3 million signatures on the petition from sub-post offices. That is what most influenced his decision to try to allay public fears.
The thing that worries me about the Bill is that all of us, regardless of which side of the House we are on, have in the past six months or so seen the concerns and anger of pensioners and others in receipt of benefits who use either their rural sub-post office or their suburban post office to collect those benefits. We have seen the concerns and anger of postmasters and postmistresses, whose livelihoods have depended on the structure and business as currently constituted. That anger has been caused by the Treasury's decision, aided and abetted by the Secretary of State for Social Security, to change the way in which benefits will be paid.
Figures have been bandied about over a number of weeks and months, both on the Floor of the House and in Committee—there has been the threat of possibly a third of sub-post offices being closed. That is what has generated tremendous fear among those who use sub-post offices and those who operate them, for whom it is their livelihood.
It has brought fear to a number of Labour Members, who have witnessed the pressures felt by their constituents who have been so concerned about the implications of the Treasury-driven policies. One only has to read regional newspapers to realise that Labour Members are queueing up to have their photographs appear in them, claiming their support for sub-post offices and for the rights of their constituents to continue to collect their benefits as they always have. However, it is interesting that few Labour Members have today echoed the concerns that they expressed in local newspapers.
The Deputy Chief Whip, the hon. Member for Manchester, Withington (Mr. Bradley), has been sitting in his place listening to the debate. No doubt the serried ranks behind him have been aware of it. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) described the Secretary of State as the Corporal Jones of the scenario. The Deputy Chief Whip's colleagues behind him know that Herr Flick is keeping an eye on the cohorts of the Labour Benches to ensure that no one gets up and causes any problems for the Government.
The problem is new clause 1, which the Secretary of State introduced today. I do not believe that its inclusion in the Bill, to which presumably we will give a Third Reading in the not too distant future, enhances the Bill. I do not believe that it addresses the problems that the Secretary of State has sought to convince the House it does.
The new clause seeks to introduce a subsidy system. The trouble is that it is so vague. There are so many ifs, buts, mays and shalls in it that there are many escape routes that allow the Government not to bring in a scheme if they decide at a later date either that they can get away with not doing so, or, as my hon. Friend the Member for West Dorset (Mr. Letwin) said, that they do not want to open up a bottomless pit of public subsidies ad infinitum.
As was said earlier, subsection (6) of the new clause even has a provision to ensure that the power to make a scheme under the new clause shall not be exercised without the consent of the Treasury.
As I reminded the Secretary of State for Trade and Industry in an intervention—which he did not deal with specifically—he has been a Chief Secretary to the Treasury; and, as any Chief Secretary will know, the Treasury's workings are supreme within Government. The Treasury's consent for any scheme involving the expenditure of public money is the paramount factor.
It will be interesting to see whether the Secretary of State is sufficiently candid to tell the House before the Bill is passed whether the Treasury and the Department of Trade and Industry have calculated the subsidy's cost; whether the Treasury has told him that it has placed a ceiling on the amount of public money it is prepared to spend, thereby possibly restricting the scheme's effectiveness; and whether the scheme is time limited or open ended.
If we are to deal with the concerns of the general public and of those who run sub-post offices, we need answers to those questions. Sub-postmasters need to know whether they will be helped, or whether the scheme is simply spin. They need to know whether—once the Bill is passed by both Houses and Parliament can no longer try to amend it, and if the Government will not implement the scheme that the Secretary of State has unveiled today—they will be left to hang out to dry.
As half a fish is better than none, I do not oppose new clause 1. However, it is seriously flawed by its vagueness and by the sparsity of detail on it provided to the House. I hope that the Minister who replies to the debate will address those issues. [Interruption.] The Deputy Chief Whip disappoints me by shaking his head. He seems to be suggesting that no Minister will bother to reply to the debate. That is unfortunate because this is an important Third Reading debate on an important Bill. We should have had that information before Third Reading.

Mr. Tim Collins: As has been said often in the debate, the Bill is somewhat disappointing. I give the Government half marks for recognising that the Post Office needs greater commercial freedom, and also for recognising that their own decision making has threatened the future of the rural post office network and that they need to be responsible for providing financial support.
I cannot, however, give them credit for the half-hearted way in which they have introduced a half-thought-through privatisation scheme; the way in which they have not properly considered the implications of the commercial freedoms that they are introducing in the Post Office; and—as my hon. Friend the Member for South-West Hertfordshire (Mr. Page) said—the way in which they have clearly inadequately considered the example of similar events elsewhere in Europe and in the rest of the world.
As for the hon. Member for Weston-super-Mare (Mr. Cotter), who spoke on behalf of the Liberal Democrats, I give him credit for making a speech that, in many ways, was a typical Liberal Democrat speech. He was half on the Government's side and half against the Government. He therefore spent most of his speech attacking the official Opposition. He certainly gave no justification—no justification can be given—for Liberal

Democrat Members' decision last week to vote with the Government against the official Opposition on a motion to save the rural post office network by scrapping the Government's plans.

Mr. Edward Davey: Will the hon. Gentleman give way?

Mr. Collins: I have no intention of giving way to the hon. Gentleman; we have heard quite enough from the Liberal Democrats on these matters.
It is deeply disappointing to hear from the Government that they believe that new clause 1 will provide the solution to the difficulty that they themselves have created. I agree with my hon. Friend the Member for West Chelmsford (Mr. Burns) that the Secretary of State is increasingly resorting to short-term temporary subsidies to get himself out of short-term political difficulties. This week, the consensus in the national newspapers has been that the Secretary of State's announcement on a subsidy scheme for the coal industry was designed simply to keep minds open until after polling day in the general election.

Mr. Deputy Speaker: Order. We are debating the Bill's Third Reading, not what is happening in the coal industry.

Mr. Collins: The suspicion, Mr. Deputy Speaker, is that the subsidy in this Bill has precisely the same short-term purpose—merely to keep post offices open until after polling day, after which the Secretary of State will not be interested.
If rural post offices are dependent on Treasury funding, they will be mindful of the fact that Treasury funding under this Government has not been sufficient to keep our police stations open or our roads and village schools maintained. The same Treasury, with the same Ministers providing the same funding formula, will supposedly keep open our local post offices. The result, once again, will be a betrayal by the Government.
In last week's debate, I asked the Secretary of State whether he could guarantee to match the one third of income to be lost by Mrs. Hilary Pavitt, the postmistress at Kent's Bank post office at Grange-over-Sands. He refused to give that guarantee then. Nothing that he has said today leaves me with any greater indication that she will get the resources that she needs. The Bill is a short-term political fix from a Secretary of State who is in a lot of short-term political fixes at the moment.

Mr. Edward Davey: It is shocking that the hon. Member for Westmorland and Lonsdale (Mr. Collins) criticised the Liberal Democrats for not supporting a Conservative motion which asked this House to applaud the record of the last Conservative Government. Under that Government, approximately 3,000 post offices in the network closed. There was no way this party would support such a motion, because it was hypocritical and did a lot of damage to the current campaign to persuade the Government to change their mind and defend the post office network. The Conservatives do pensioners no favours with their hypocrisies, and we will not support such statements.


Before coming to this House, I was a management consultant for a company called Omega Partners, which did a lot of work in the postal service industry. I visited 40 postal administrations and worked for 12 of them. I wrote a paper, co-authored with a company called Pricewaterhouse, for the US Congress on how one could commercialise, deregulate and liberalise postal markets.
That study looked at the experience of post offices internationally and how they could commercialise and gain commercial freedoms, as the Bill seeks to provide for the British Post Office. It was clear that post offices had managed to enter the modern world, take on modern management theory and develop and modernise their postal services while remaining in the public sector. To that extent, I welcome the Bill, which retains the UK Post Office in the public sector.
However, the commercial freedoms that are being given to the Post Office in the Bill are limited. Countries such as New Zealand, Finland and Sweden have enabled the management of their post offices to invest, develop modern technology, have freedoms to manage their work forces more effectively and provide the consumer with a better-quality service at a lower price. They have been able to do that far more ambitiously than this rather timid Bill proposes.
When the New Zealand post office was given its commercial freedom, it was allowed four long-term lines of credit with private sector banks. These were not guaranteed by the state; therefore, they did not score in what used to be called the public sector borrowing requirement.

Mr. Alan Johnson: I just wondered whether the hon. Gentleman had noticed in the course of his investigations that New Zealand Post no longer delivers to the door in rural areas; and that, despite paying a charge of $80 a year, rural customers still have to collect their mail from the nearest post office.

Mr. Davey: I am well aware of that, but the Minister does not give the full story. He may not know that I have visited New Zealand Post twice and I have spoken to the former chief executive, a Mr. Elmar Toime, who is actually a citizen of Australia. He explained that situation when I questioned him on that very point. He said that those circumstances affected a small handful of farms on the south island of New Zealand that were hundreds of miles from the postal network. In other words, New Zealand Post faces totally different geographical and topographical conditions.

Mr. Deputy Speaker: Order. It is very interesting hearing about New Zealand. I have relatives there and it is nice to hear how they are getting on. However, on Third Reading we should perhaps not be going into such detail. It is necessary to mention only that there are good things and bad things about New Zealand and then move on.

Mr. Davey: I totally agree with you, Mr. Deputy Speaker; I am in danger of being a post office anorak. However, my point was about capital investment, which goes to the heart of the Bill. The experience of other countries, such as New Zealand, shows that long-term lines of credit that have not been guaranteed by the state have enabled other postal administrations to develop real commercial freedoms to invest significantly and develop their services.
Those postal services have blossomed, and the only reason we have not taken that route in this country has nothing to do with a tiny number of very remote farms having to collect their post at the end of long lanes, but is connected with Treasury rules that are constraining the development of a potential new type of corporation. New Labour's modernisation programme has not seen fit to modernise the Treasury. The prehistoric, dinosaur thinking of the Treasury has not changed one bit to enable the sort of development that has taken place in other western democracies and allowed them to modernise their public services. That is why the Bill has not lived up to the billing that the Government gave it, and that is a great shame. If the Government had given the Post Office those unguaranteed long-term lines of credit, with no bail-out from the state, it would have enabled the development of a real entrepreneurship within public sector ownership. It is a shame that the Government have not taken that approach.
Subsidies have been an issue in the debate tonight. In many ways, total nonsense has been talked about subsidy, because there have always been subsidies in the Post Office. The whole system of uniform pricing and uniform tariffs incorporates subsidy, and the idea that there was no subsidy under the Conservatives is nonsense. There were vast subsidies paid between one post office network system and another, between delivery in one city and delivery in another, and between delivery in urban areas and delivery in rural areas. Of course those subsidies existed. The Bill means that they will continue, but in a different form.
The question is not whether subsidies are paid to maintain a universal postal service in the country—I am sure that all hon. Members would agree that such subsidies are needed; the question is one of transparency. Under the Conservative Government, the subsidies were totally opaque. New clause 1 has brought a degree of increased transparency, although I wish that it made matters clearer. As my hon. Friend the Member for Weston-super-Mare (Mr. Cotter) said, the question of subsidies is still far too opaque, but at least it is clearer than it was under the ancien regime of the former Conservative Government.
It is amazing that Conservative Members should criticise subsidies now. Subsidies existed under the previous Conservative Government, who were not prepared to acknowledge them. They wanted to try to hide them and pretend that they did not exist.

Mr. Leigh: Does not their acceptance of the universal service and universal tariff shout from the rooftops the fact that the previous Conservative Government, like every other Government, accepted the principle of cross-subsidy in the Post Office?

Mr. Davey: That was exactly my point, but the question is whether a Government are willing to make those subsidies more transparent. This Government are going down that road, and the previous Government did not. I think greater transparency in subsidies would assist public policy development.
Finally, I am worried that the Bill does not protect sufficiently the ordinary post offices in my constituency. Under the Conservative Government, post offices in Kingston, Tolworth and Surbiton were closed. The Bill will cause some of the retail outlets that took over some of those post offices' responsibilities to close as well.
That would be a great shame. People will be put out of business. Pensioners will have to take long bus journeys into town to collect their pensions. That will reduce the services available to my constituents, and I sincerely regret that the Government are going down this route.
The Government should be modernising by trying to assist the Post Office to take on contracts from the banks. The Bill does not do that, and it fails to give real commercial freedom to the Post Office. It is therefore a missed opportunity.

Mr. McLoughlin: Having listened to the hon. Member for Kingston and Surbiton (Mr. Davey), I am glad that the Liberal Democrats are the Government's allies, and not the Opposition's. The hon. Gentleman said that he has studied the matter with great care and has examined what has gone on in New Zealand, but the Minister was able to point out some of the disparities between the universal service here and the service in New Zealand.
The hon. Member for Kingston and Surbiton answered that we should not worry about a few farmers scattered around the ends of the earth. That is an insult to farmers in my constituency of West Derbyshire—and to farmers in the Romsey constituency. I shall take every opportunity to make sure that they are aware of what the hon. Gentleman said.
I shall not make a long speech, unlike the hon. Member for Kingston and Surbiton, who took us on a world tour.

Mr. Edward Davey: The hon. Gentleman does not have a clue.

Mr. McLoughlin: The hon. Gentleman says that I do not have a clue, but if he spoke with a clue, I am glad that I speak without one.
I am sorry that the Secretary of State waited so long before bringing new clause 1 before the House. In so doing, he did not give us enough opportunity to study the new clause. Having seen it, I can understand why he did not want to give us long to study it. The new clause does not say that there will be a subsidy to village post offices, or what level of subsidy it will be. Let us be clear that we are talking about sub-post offices.
The hon. Member for Kingston and Surbiton talked about 3,000 post offices having closed during 18 years of Conservative Government. Post offices will close, given the very nature of their business. They are often run from people's homes, and when the people running them want to retire and sell their homes, that leads to closures. I accept that there were closures under the previous Government, yet over the past three years we have seen

1,000 closures. That is an escalation of post office closures on a massive scale, which is why the Government introduced their new clause. When the Bill was first conceived, the Government were not looking at supporting the sub-post office network. It is only as the Bill has progressed through the House that the new clause has been brought forward.
I have seen the number of post office closures in my constituency escalate dramatically. There have been closures in Cubley, Longford, Roston, Flagg, Lea Bridge, Tissington, Fenny Bentley and Taddington. Such a major escalation of closures is a cause of concern. It is partly due to the Government's insistence on the switch to automated credit transfer and the fear that that decision has struck into the sub-post office network. That is why, after much pressure on the Government, we have managed to drag out from them this new clause.
I hope that the new clause will do what the Government desire. We will be watching future closures very closely. The system of subsidy does not reflect the great difference in the rural network of sub-post offices. Some are open for two hours in the morning for four or five days a week, while others are full time. It will be interesting to see how the Government arrive at the formula to give subsidies to community post offices and to those that offer full services in rural areas.
We have not found out enough from the Government. I hope that when the Bill goes to another place, people there will tease out from the Government exactly what they are talking about in new clause 1. I hope that the other place will fulfil that role.

Question put and agreed to.

Bill accordingly read the Third time, and passed.

DELEGATED LEGISLATION

Mr. Deputy Speaker (Mr. Michael J. Martin): With permission, I shall put together the motions relating to delegated legislation.

Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

CRIMINAL LAW

That the draft Youth Justice Board for England and Wales Order 2000, which was laid before this House on 3rd April, be approved.

LOCAL GOVERNMENT FINANCE

That the Local Government Finance (England) Special Grant Report (No. 61) on Special Grants for School Standards, Support of School Budgets and Costs of Transitional Funding (HC 399), which was laid before this House on 6th April, be approved.—[Mr. Betts.]

Question agreed to.

Assisted Areas Map

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Betts.]

Mr. Malcolm Moss: The Minister's announcement on 10 April of the Government's intention to submit an amended set of proposals for new assisted areas brought disappointment and dismay to many of my constituents and delivered a body blow to the Fenland area. It is almost a year since I stood in more or less the same place in the Chamber to plead the case for the continuation of assisted area status for Wisbech. At that time, the Government were making their first attempt to redraw the regional selective assistance map of the United Kingdom. We were delighted that a new area, embracing Fenland district council and King's Lynn and West Norfolk borough council, was designated by the Government and included in their submission to the European Commission in July 1999.
Imagine our devastation, then, when we heard of the Government's latest U-turn. Our area is to be removed from the assisted area map because of concerns expressed by the Commission, and we have only three weeks for consultation. I believe that the Government have made an error of judgment, and I shall try to put the case for reinstatement of the Fenland partnership area in the assisted area map.
No one disputes that there must be rules and strict criteria to identify areas that warrant regional selective assistance. However, a model that fits the city-region concept of mainland Europe does not necessarily embrace the particular needs of rural areas in the UK. To my mind, the key is flexibility, without which needy areas such as Fenland and others in the eastern region will lose out.
The new criteria set by the Commission require a reduced population coverage of the national map. The eastern region has provided 43 per cent. of the reduction. That can hardly be fair when eight regions are involved. The east of England is being asked to shoulder the lion's share of the proposed reduction, but has also received the lowest funding for its regional development agency and its inward investment effort.
Several companies with the potential to employ significant numbers in a rural area suffering from a steady reduction in agricultural employment have been encouraged to consider investment in the fens. They have been attracted by the opportunity of offsetting logistical disadvantages with financial assistance. I believe that Fenland and King's Lynn and West Norfolk deserve reinstatement.
Let us consider the track record of assisted area status in the Wisbech travel-to-work area, which has been the cornerstone of economic regeneration in the area since 1993. The area has an impressive track record in attracting grant, assisting companies and creating and safeguarding jobs. Some 75 offers of grant were made, totalling £5.6 million. That levered in some £35 million in private investment. A total of 1,043 jobs were safeguarded, and 1,296 created. There is both an opportunity and a need to continue to make effective use of regional selective assistance grants and to secure best value from them in the King's Lynn and Fenland areas.
In the recently published draft regional planning guidance, paragraph 4.2.5 states that a key element of the strategy is
addressing the remaining disparities in opportunities and quality of life across the region through a focus on the priority areas for regeneration.
Policy 10 of the guidance states:
Development plans should include policies consistent with sustainable development to promote regeneration, economic enhancement and environment protection and enhancement of the Priority Areas for Regeneration, including Wisbech and the remote rural areas, the Rural Development Areas and those rural areas designated under the European Union's Objective 2 and Transitional Objective 5b programmes.
Among other things, policies in those priority areas should, first, ensure an adequate supply of land, employment and premises; secondly, promote the areas for inward investment; and, thirdly, provide business support services.
The priority areas for the regeneration strategy are also reflected in the regional economic development strategy published by the East of England development agency. One of the aims of that strategy is the development of a thriving rural economy. Strategic priorities identified in the REDS include the attraction of new and high-growth businesses to the area; the revival of market towns; and the support of diversification in the agricultural sector. The strategy also refers specifically to the rural development area and to the Wisbech priority area for economic regeneration.
If the Government are serious about developing a thriving rural economy and targeting resources on priority areas for regeneration, they must understand the important role that assisted area designation has played, and can play in future, in delivering their stated economic objectives in the fens. To withdraw assisted area status does not represent joined-up thinking on the implementation of their policies for those areas that have already been identified as priorities for regeneration.
Although current economic headline indicators might not appear to be as poor as those for other areas, the Fenland and the King's Lynn and West Norfolk areas are characterised by an exposure to structural decline among traditional local industries; by over-dependence on declining economic sectors—Fenland is placed at 443 out of 459 in the Henley centre's industrial structure index; by a forecast jobs gap of 9,800 by 2006; by low educational attainment and skills; by lack of an investment image and a credible offer in the investment market; by a cost-value gap for industrial and commercial development that inhibits investment; and, finally, by peripherality and poor strategic transport infrastructure.
The substantive case relates to the underpinning principles of the Industrial Development Act 1982, which clearly states that the Secretary of State
shall have regard to all the circumstances, actual and expected, including the state of employment and unemployment, population changes, migration and the objectives of regional policies.
The economy of the area has shown some improvement in recent years, in line with the national picture. However, the local economy and employment are based on industries that are in rapid decline, where only continuing capital investment will prevent rundown and closure. Recent closures and job losses in the fens include H.L. Foods Ltd., which is making 300 people redundant. Kings Lynn Steel is closing, creating 40 redundancies;


SCL Breamist Ltd. is closing, making 70 people redundant; and Courtaulds is closing with 75 redundancies.
Without the designation, private sector investments will be diverted elsewhere in the United Kingdom and to Europe. Nor have the fens benefited from a jobs and business spin-out from Cambridge with its high-tech and knowledge-based economy—despite its geographical proximity. That benefit may reach the southern parts of the fens in the longer term, but it is unlikely to affect the whole area until there are significant improvements in the skills of the work force and in the transport infrastructure. It is simply unrealistic to expect benefits from Cambridge.
The area's poor future prospects are demonstrated by the fact that it has little representation in the seven sectors identified by the East of England development agency as key to the region's future growth and prosperity. The fens has a far lower proportion of employment in those sectors than the region or England as a whole. It also has a work force with considerably lower educational attainment and skill levels than elsewhere in the region. Such attainment and skills are essential to attract and support these high-growth sectors.
The withdrawal of assisted area status puts at risk the attraction of the areas to future investors. Specifically at risk is a significant investment by a European company in the fens.
I have in front of me a letter from the managing director of Graveley Packing, owned by Budelpack, a Dutch company. The managing director, James Robinson, writes to me in the following vein:
I was dismayed to hear the news that the Government has decided to remove Fenland from the above grant assistance.
As you may know we applied for, and received, a grant of £0.5m towards buildings and equipment under the selective regional assistance scheme. This of course was subject to the EC confirming the UK regional proposals. The grant was based upon the creation of 283 permanent and 75 temporary jobs in addition to safeguarding the current 125 jobs.
Because industrial property values in March
in the constituency of North-East Cambridgeshire
are extremely low we have to take a substantial loss on our investment. Our new building will cost £3.8 million. Its open market value when complete will be
only
£2.8m. We have had huge difficulty in obtaining adequate external finance for the building because of this Elm cost-value gap. I have today received a suitable offer but unfortunately it is dependent on grant assistance being
made
available to us.
It appears therefore that this decision, if confirmed, has pulled the rug out from under our scheme and its associated job creation.
The possible consolation prize of tier 3 assistance of some 7.5 per cent. grant aid to a maximum of £75,000 in Cambridgeshire is not an option. That company is unlikely to be eligible, as it is too large and multinational—and, of course, the Dutch parent company takes a dim view of what has taken place.
While the first programme of assisted area benefits had largely helped the indigenous business base, there were emerging benefits of attracting new firms to the area from

abroad. Those benefits will now be lost, as the fens will no longer be able to offer financial support for companies seeking to relocate to the area.
The way forward for the fens is to redraw the whole map and provide the fens with the assistance that it needs. I know that we have only a few weeks for consultation and I recognise the need for the Government to press on with the regional map so that the key areas may receive the necessary financial assistance. Therefore, in asking the Minister to consider redrawing the map, I realise that it is something of a tall order.
However, last week, the Government, in launching their national strategy for neighbourhood renewal, acknowledged that job creation was the key to addressing social exclusion. Regional selective assistance and the invaluable help that it provides in both creating and retaining jobs is crucial to addressing the wider deprivation and social exclusion problems facing the fens. It will support investment to retain and enhance the competitiveness and performance of existing industry—notably the food cluster that we have in that part of the fens. It will be a vital tool in creating opportunities for rewarding work, raising aspirations and making learning pay. Finally, it will promote private sector investment in infrastructure and property, essential prerequisites for attracting and creating more businesses.
All the agencies in the fens area are committed to working together in a co-ordinated way to address the area's problems. The area had already suffered one body blow, with its failure last autumn to be designated as an objective 2 area. Without RSA designation, it is likely to miss out on other forms of national support, such as the single regeneration budget and EEDA's partnership investment programme, which is largely tied to such priority areas. The funding available to EEDA, as the most poorly resourced RDA in England, is already limited. Targeting to objective 2 and RSA areas will mean that little funding is available for other areas that are not so designated.
Assisted area designation up to 1999 brought significant benefits to Wisbech. It helped the area benefit from the general improvement in the national economy. However, agencies in the fens believe that this is only a temporary position, and that with the removal of two core pillars of support—objective 2 and the RSA—the economy will falter and slip into decline. Assisted area designation will help prevent that, and, as we all know, prevention is better and less costly than cure.
The Minister will now know that the fens should not be bypassed again, and he should give the partners—notably the East of England development agency—the resources to do their job. I ask the Minister to assist and encourage all central Government, regional and local agencies and the private sector to work together to address the problems of the fens area. We hope that, in this very short consultation period, they will listen to all the representations made to them by the interested parties, and reinstate the fens on the assisted area map.

Dr. George Turner: I congratulate the hon. Member for North East Cambridgeshire (Mr. Moss) on securing this short debate, and thank him for allowing me to contribute briefly to it.
As the hon. Gentleman pointed out, the area that earlier had assisted area status included the fenlands part of my constituency to the west of King's Lynn, which forms


almost a separate travel-to-work area from the Wisbech area. The hon. Gentleman made the case very clearly with regard to the disappointment that will be felt by my constituents who live in that fenlands part of my constituency, who will feel the same deprivation as his constituency will feel over the withdrawal of support for that travel-to-work area.
I must admit that there was some icing on the cake for us last summer, when we heard that the Government were taking to Europe proposals to extend the former area to include much of the rest of my constituency—in particular, some of the major areas of deprivation in the King's Lynn area itself. It is a part of the country that has lost many jobs as a result of the decline of fishing from the port and the loss of the food processing and canning works which were there historically, and one that suffers from a great portion of work being too low-paid and in non-growth areas of the economy. We were looking forward to the extra support that assisted area status would have brought to us.
Those constituents saw what they had thought would be some icing and some jam taken away from them. I suppose that they will reflect that, under the same Government in the past three years, unemployment has dropped considerably within the area. The economic development officer will have a harder case to make in pressing the need for assisted area status than he would have had three or four years ago, thanks to the Government's success in running the economy.
I should like to add two points to those made by the hon. Gentleman. First, could my right hon. Friend the Minister assure us that the case that is being drawn up will be considered carefully? The representations and the work being done now will be considered in a short consultation period, so will he assure my constituents that that does not mean, as some cynically think, that the representations will not be listened to? Secondly, will he assure us that the decision, which was pushed on us in large part from Europe, does not mean that the Government will withdraw other measures of support and that they will consider carefully the needs of the area? As the hon. Gentleman said, we have one of the worst funded—by almost a factor of two—regional development agencies in the country. There is concern that not enough measures are in place to support the economy if assisted area status is not given to us.

The Minister for Trade (Mr. Richard Caborn): I commend the hon. Member for North East Cambridgeshire (Mr. Moss) on the case that he has put forward on behalf of his constituents for assisted area status. I understand his disappointment and that of my hon. Friend the Member for North-West Norfolk (Dr. Turner). May I point out at the outset that—yes—the consultation period is short, but we will consider all representations very seriously?
The east of England region, even under the amended proposals, will have an increase in coverage on the assisted areas map, which was introduced in 1993. That increase has been made at a time when the overall population coverage has been reduced by a fifth. Overall, the amended proposals will represent a pretty good deal for the east of England region.
There is, I know, disappointment in King's Lynn and the fenland areas. However, there is a recognition and understanding of why the changes have been made.

Indeed, I was particularly interested to read last Tuesday's article on the assisted areas announcement in the Eastern Daily Press. In that article, the chairman of the development committee of King's Lynn and West Norfolk council is quoted as saying that, in comparison with other areas—including Yarmouth, Lowestoft and Luton—that area has not done too badly. Similarly officials at Fenland council are quoted as saying:
The first time we applied for assisted area status in 1994, unemployment was three times above the national average and now it is only half of one per cent. above it. There are areas of much greater need than ours.
The local newspaper and the people who were quoted were responsible to make that point.
The Eastern Daily Press article clearly shows that, although there is disappointment, there is also an understanding of why we have made the choices that we have. Our objective for the new assisted areas is to target assistance on areas of need where such assistance will be effective in meeting that need. That remains the case.
However, we are trying to meet our objective within the population ceiling that the European Commission has set us. If we include King's Lynn and Fenland in our proposals, another area—either in the region or across the country—will have to come out to facilitate that. That is the hard choice that we have had to make.
We recognised the needs of King's Lynn and Fenland in our original proposals and I can assure the hon. Member for North East Cambridgeshire that we fought hard to secure the July proposals that we submitted to the European Commission. However, ultimately the Commission holds the whip hand on assisted areas. Therefore, we were faced with the choice of amending our proposals or facing, as the hon. Gentleman underlined, a lengthy and uncertain investigation process, at the end of which we might still have been in exactly the same position as we are now.
The hon. Gentleman may find it helpful if I set out the background to the changes that we made last week. The Commission made it clear to us that it was concerned that our July proposals would have given the United Kingdom an unfair advantage over other member states. However, in view of the misconception that appears to be held by some people, I want to stress that the Commission did not decide that our July proposals were illegal. Also, I note that it has never accused us of gerrymandering them.
The competition directorate of the Commission was concerned that our approach to the July proposals might have allowed the UK to include employment sites within the assisted areas without including the population in surrounding areas who might benefit from aid given to the businesses on those sites. Within our population ceiling, that would have allowed the UK greater scope for securing mobile investment in competition with our European partners.
In view of those doubts, Commissioner Monti informed us that unless the proposals were amended, he would be required to open an investigative procedure under article 88(2). Under that procedure, the Commission would set out its concerns about the UK's proposals and invite comments from interested parties, not just in the UK but in every member state. It would then, in the light of those comments, decide whether to accept the proposals.
Even if our proposals were accepted at the end of that procedure, approval of the new assisted areas would be delayed by up to six months. The hon. Gentleman


recognised that there would have been a risk that our original proposals would not be accepted at the end of the article 88(2) procedure, given the Commission's concern that our proposals gave us an unfair advantage and given the scope for interested parties in other member states to put their case. The only alternative open to us, other than the article 88(2) procedure, was to amend our proposals to meet the Commission's concerns, and that is what we duly did.
We are not alone in amending our proposals in response to the concerns raised by the Commission. The European Commission opened article 88(2) proceedings against the proposals submitted by Germany, France, the Netherlands, Belgium, Portugal and Italy. Germany, Belgium, France and the Netherlands have amended, or are amending, their proposals in response to the Commission's request. The procedure continues for the other member states.
With many other member states making changes and securing the Commission's agreement to their new regional aid maps, it would have been wrong to continue to press our case with no guarantee of success. The new assisted areas map will benefit some 16.5 million people in the UK. During the seven years that the map is in place, companies will be able to apply for grant aid from total expenditure currently in excess of £250 million a year. Further delay and uncertainty would have been damaging to those people and businesses.
We have had to make a number of hard decisions and as a consequence some areas have had to be removed from the map. Although that is obviously disappointing

for the areas concerned, I am confident that our new proposals present the best possible deal that we could broker with the Commission.
I should, however, make it clear that the new assisted areas are only part of the Government's strategy for tackling regional and local needs. We are putting in place a comprehensive framework for ensuring that all parts of Britain can meet the challenges of the future. We inherited an unco-ordinated, disjointed set of regional bodies. Regional activity on inward investment, supply chains, rural development, physical regeneration and social and economic regeneration were all in separate organisations. There was no overall strategy to bring together regional activity. We have addressed those problems.
I am pleased that the hon. Gentleman pleaded for more resources for the East of England development agency, and I hope that he will continue to do so. I hope that, if the Conservatives ever get back into power—God forbid—he will argue that the development agencies ought to remain in place, because the official position of Conservative Front-Bench Members is that they will be closed down. It is therefore pleasing that the hon. Gentleman acknowledges the worth of the development agency in the lives of his constituents.
The hon. Gentleman will also understand that we have devolved power to Scotland and Wales and set up the regional development agencies in England to address the fragmentation to which I referred. Last October, each RDA produced, with local partners, a strategy for improving the economic performance—

The motion having been made after Ten o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at six minutes to Twelve midnight.